Store rents to rise by average of 15-20% in The Square

MOST traders at The Square shopping centre in Tallaght, west Dublin, are to pay average rent increases of between 15 and 20 per cent. The rent rises follow the first review of their terms since the complex opened five years ago.

Negotiations on the new rents are to continue over the coming weeks and while most of them are likely to be settled by agreement, a small number of cases is to be referred to arbitration.

Neither the landlords nor the tenants are agreed on the average level of rent increases being struck because of the huge variations involved. The increases will range from as low as 1.43 per cent to more than 50 per cent, reflecting a substantial number of anomalies in the rents set in the run up to the opening of The Square. Many of the shops were offered to high profile tenants at well below the open market rent to entice them into the centre.

Some of the traders who have managed to keep the rent increases at modest levels include Vera Moda (rent will rise from £70.000 to £71,000, a 1.43 per cent increase for its unit of 1.344 square feet); Adams Childrenswear (from £132,000 to £135,000, a 2.27 percent increase for its 3,231 square foot store); Saxone (from £82,000 to £85,500, a 4.27 per cent increase for 1,678 square feet); Millets (from £70,000 to £74,000, a 5.71 per cent increase); Marathon Sports (up 5.6 per cent to £89,750); Goldsmith (up 7 per cent to £37,000 for its 650 square foot unit); The Body Shop (from £32,500 to £45,000, over 38 per cent increase); Fuji (from £30,000 to £36,250, over 20 per cent increase).

At the other end of the scale, A Wear is likely to see the rent for its 8,500 square feet move from £140,000 to around £180,000.

The new rents being agreed differ considerably from floor to floor because of the wide variation in trading. One agent said it was not possible to get an overall fix on the rent increases because of the very considerable number of tenants who were offered discounts to move into the centre.

John Bruder of AlB Investment Managers, which owns 25 shops in The Square, said it had reached agreement on new rents for 12 out of 16 shops where reviews were due. He had not seen an overall average figure for the rent increases achieved in the centre.

The average increase for the 12 shops in the AIB Investment Managers portfolio worked out at 20 per cent, though this did not necessarily represent the general movement in the centre. Its objective was to reach agreement relatively quickly, he said.

Besides the AIB Investment Managers, the Investment Bank of Ireland and the Bank of Ireland Pension Fund own about 35 of the stores for various funds. GRE, the joint developer of The Square, is understood to have six or seven shops.

Private investors with shops in the centre are understood to include Ken Rohan, who paid £3 million for six units; solicitor Noel Smith, and property developers Larry O'Mahoney and P.J. McGrath.

Most of the large traders in The Square own their premises and are not affected by the rent increases. These include Dunnes Stores, Crazy Prices, UCI, Hayes Cunningham Robinson, Bewleys, Peter Mark and Graham O'Sullivan.

Work has begun on the development of a further 55,000 square feet of retail space at The Square and a 900 space multistorey car park, which will cost around £8 million. Unlike the first phase of the development, there will be no capital allowances available for the extension, though tenants will be able to claim double rent allowances. The new shops, which will include a department store with 25,000 square feet of space, will be sold to investors.