The soon-to-open Karen Millen store on Grafton Street will be paying a rent of over €1 million per year, a level that will trigger other rent reviews on the street, says Jack Fagan.
Dublin's Grafton Street looks set for another round of rent increases following the settlement of a new rent level for numbers 72/73 where leading fashion retailer Karen Millen is to replace another UK group, Principles.
Karen Millen will be paying an overall rent of €1,050,000, equating to a Zone A rate of over €10,000 per sq m (€929 per sq ft). The previous highest Zone A rent of €8,700 per sq m (€808 per sq ft) was set for the LaSenza unit in October, 2004. The agreement on the higher figure will trigger a number of other reviews on the street which have been overdue for several months.
The rents due for review include HMV, which is paying €342,829 for one part of its premises and €462,500 for the remainder. Next is already in negotiations on its old rent which stands at €393,499. The American trader Footlocker is also to learn something about Grafton Street rents when it gets involved shortly in the review process.
Whatever Zone A rents are agreed in all these instances, they are still likely to be below the €13,751 per sq m (€1,277 per sq ft) set three years ago for the River Island store on Grafton Street owned by Arnotts. The double-fronted layout of the building ensured that its Zone A rate would be higher than the general run of shops.
Earlier this year, Karen Millen had apparently agreed to buy the leasehold interest held by Principles for €1.45 million. At that stage the landlord Salix (Bank of Ireland Pension Fund) stepped in and, with the agreement of Karen Millen, acquired the lease for the same figure.
The fund's agent, Jones Lang LaSalle, then proceeded to let the premises to Karen Millen, part of the Mosaic Group, which is currently fitting out the shop in preparation for an opening in early October. Salix's intervention gave it an uplift of just over 100 per cent on the passing rent which was fixed only four years ago.
According to Stephen Murray of Jones Lang LaSalle, the letting underlines the strength of demand for large stores in the south inner city.
Numbers 72/73 is one of a small number of large outlets on Grafton Street with an overall floor area of 915sq m (9,849sq ft) of which almost 200sq m (2,153sq ft) is on the ground floor.
Murray describes Karen Millen as a "very desirable new tenant selling upmarket ladies fashion".
The arrival of this store, he says, represents a significant enhancement of the street's tenant mix at a time when there has been much debate on the topic.
The practice of landlords buying-in leases is now well established on the high streets. In this instance, Salix has achieved a new benchmark Zone A rent and an accelerated rental income. This, in turn, delivers a significant enhancement to the value of the Grafton Street property.
Last autumn, Salix was also involved in a similar proactive deal when it obtained vacant possession of the former Habitat store at the top of Grafton Street (6/7 St Stephen's Green) and then let it to the Arcadia Group at more than 100 per cent above the old rent.
Lisa McGrane of Jones Lang LaSalle represented Salix on the Grafton Street transaction while Caren Leon of CB Richard Ellis advised Principles. Aidan McDonnell of Colliers Jackson-Stops acted for Karen Millen.
