Tuesday 24 October 2017

Small retailers' rent burden is choking the life out of Dublin

Unless landlords are brought into line, the unique character of our capital city will be lost forever, says Hilary A White

MOUNTING business costs for Dublin's retail sector are not only closing stores and contributing to the live register -- they are also posing a threat to the capital's character.

With rent being the prime cost for most city retailers, smaller and more vulnerable shops are unable to compete with international outlets.

The situation received some alleviation earlier this year with the abolition of upward-only rent-review clauses (UORRCs) and the establishment by Justice Minister Dermot Ahern of the Working Group on Transparency in Commercial Rent Reviews.

When these clauses were finally done away with, it was with the aim of creating a more equitable relationship between landlord and tenant.

However, they still apply to existing leases, a fact that hurts many established retailers, who are locked into paying huge rents during a severe economic crisis.

Julian Charlton of the Apollo Gallery on Dawson Street remains unconvinced by these measures and claims that UORRCs are "an invention of lawyers and estate agents".

He says: "The clauses favour landlords. Lawyers and estate agents act for them and are themselves landlords. These clauses are anti-competitive.

"These issues have gone to Europe by way of an application that I made to the European Court of Human Rights last year and the court is now examining our application."

Mr Charlton also believes that these UORRCs have actively contributed to the property bubble by allowing landlords to fix the prices of their properties.

"If rent can only go up, the price of property can only go up," he stresses.

"They have to be removed. Landlords are still looking for these crazy increases. Rents have to go down. Ireland's competitiveness is decreasing. These costs are terminal."

Mark Fielding, chief executive of the Irish Small and Medium Enterprises Association, explains why the screw continues to be turned by some landlords.

"The banks and large financial companies own much of the property in question and are uninterested in the plight of the small retailer. Also, many landlords are heavily indebted to the banks, who are expecting to be repaid interest and capital.

"Many tenants find that while they can come to some arrangements with landlords, the landlord's bankers insist on higher rent to repay their loans and maintain the value of the property in question."

The Pen Corner on Dame Street is owned by John Fitzgerald. He says a more level playing field is required.

"If a premises comes up near me because the previous tenant was unable to pay rent, I'd be unhappy to see companies coming in paying lower rents than me. It means the premium I'm paying for this location is being degraded.

"So essentially, we'd get what's happening anyway -- fast-food shops, sandwich bars Spars and Centras."

The recent closure of Road Records on Fade Street after 13 years hinted at another concern. Smaller retailers provide the city with its colour and personality and book stores, record shops and quirky outlets are part of the wider cultural sphere.

We cannot afford to lose these types of stores, as Julian Charlton argues.

"If you destroy art galleries and bookshops, if you destroy the cultural life of a country, you destroy the country," he says. "The arts outstrip other sectors in generating wealth. Culture is an essential part of the life of any country."

Fiona Smyth runs The Harlequin on Castle Market, a long-established vintage and second-hand clothing store. Five years ago, her rent doubled and it looks set to increase again following a recent review.

Scrapping UORRCs for existing leases would give businesses like hers more chance of weathering the economic storm and would help Dublin maintain its novelty value as a holiday destination.

"We have a huge amount of tourists coming here because it's something different," she says. "They don't want H&M or Zara -- they can get that in any capital city."

Admiring the facade of The Doll Store on Georges Street -- Ireland's oldest toy shop -- last week were Barbara and Luca Piccardi from Florence.

Barbara said: "These are the kind of interesting shops for tourists and this street is what we expected Dublin to be. When you visit a city, you want the life of the streets."

It's time to ask ourselves what we want from our capital city. Do we want a street-level replica of Dundrum Shopping Centre, favouring glossy, accountant-led international chains over owner-led Irish businesses?

Or should we place more value on smaller shops that provide character, as well as enriching the community with variety, expertise and face-to-face customer service?

Sadly, when the recessionary dust settles, it may be too late to answer.

Sunday Independent

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