Retail SectorThe lease for Café Java on 5 South Anne Street, Dublin 2, has been sold for region €1 million - the highest price recorded for a city centre premises, with the exception of Grafton Street.
The flagship of the coffee house chain - the premises is comprised of a ground floor of 83.6sq m (900sq ft), a first floor and basement - the building has high ceilings, is in good condition and has planning for restaurant use. The lease runs for 35 years from 1990.
Leases on streets off Grafton Street are making in the region of €250,000 to €350,000, but Café Java owner Kieran Mulligan says "when Grafton Street rents go up, the tide lifts all boats".
Mulligan, a property consultant and developer, says: "We became a victim of the market. In September 2000, our rent was €70,000. At the review in September 2005, it was €150,000 and, as we speak, the market value is in excess of €200,000. At the next review, it would be in excess of €250,000 to €300,000," he says.
"The café was very successful for a number of years, but when we looked at the rent and what money we needed to spend - cafés need refurbishment about every five years - come the next review we wouldn't be able to survive. So we had the rent and refurbishment and then somebody who was going to pay a massive figure. It was easy to work out what we had to do."
Food is different from retail, he says, and predicts that after the next rent review "indigenous guys won't be able to trade. There will come a time when all the restaurants and cafés will be driven out of the city centre. Only retailers and big chains can pay those rents."
The lease was bought by Emmet O'Neill of Smiles, the one-stop dental care provider, who now owns the leases of numbers 3, 4 and 5 South Anne Street.
While this Café Java has now closed, the business and equipment have not been sold and in mid-February a new Café Java will open on the waterfront at Grand Canal Square in the south docks, a smart location in keeping with those of the other Café Javas, which are to be found in "prime suburban locations" - Upper Leeson Street, Sandymount, Donnybrook and Blackrock.
The 20 full-time and part-time staff all have been offered jobs at Grand Canal Square. "When you have existing staff, it's much easier to open a new business," he says.
By 2008-09, he plans to have up to 10 of his upmarket coffee houses trading - "1,000sq ft is our ideal size in proven suburban-type locations".
Kieran Mulligan and his then-girlfriend, Ashleen, opened the first Café Java on Upper Leeson Street in 1992 when a tenant for the ground floor of his recently-purchased office building dropped out.
"I had committed to the banks. I had an empty property. Coming from a retail background, I was looking for some business that would pay the rent." (His family own a number of pharmacies in Waterford.)
He had seen the success of the "bean-to-cup" formula in the US where, like many young Irish, he worked in the 1980s. Coupled with the heady memory of Italian coffee during Italia 90, the idea came for a sophisticated coffee shop serving real, ground coffee.
"We opened in 145 Upper Leeson Street for €25,000. We're opening Grand Canal at a cost of €250,000."
Ashleen, now his wife, is an interior designer and advises on the design end of the business.
He oversees the rest, but carefully selects his staff. "I have a full-time operations director and a financial director. They are the ones who run it on a day-to-day basis. You must have your location right and the right people running it," he insists.
