The popular fashion chain is believed to have agreed a rent of around €2.4 million - the highest for a city centre store, writes Jack Fagan

DUBLIN IS to get a major new retail store early in the new year.

Three shops along the frontage of the Ilac Centre on Mary Street and three more in the adjoining mall are to be combined and redeveloped to allow River Island trade out of what will be one of the largest shops in the city centre.

The deal is expected to strengthen the appeal of the Mary Street/Henry Street area and the Ilac Centre in particular which has been extensively refurbished over the past three years at a cost of €60 million.

The new store will have a ground floor area of 743sq m (8,000sq ft) and a further 789sq m (8,500sq ft) at first floor level, making it the largest to be occupied by a single trader in the Henry Street area.

River Island was in direct competition with Next and Esprit for the unit and, driven by the huge success of its other store at the bottom of Grafton Street, clinched the deal by offering a higher rent than the two other fashion houses.

Though the precise rent has not been disclosed, it is understood to be around €2.4 million - making it the highest for a city centre store. Ironically, River Island pays €2.1 million annually for its higher value Grafton Street shop which has a trading area of 929sq m (10,000sq ft) over three levels.

The Ilac's River Island store will have over 60ft of street frontage with Zara on one side and HM on the other. Three years ago the remaining Ilac frontage on to Mary Street was redeveloped to accommodate HM who are now paying a rent of €1.5 million for 371sq m (4,000sq ft) at street level and a further 650sq m (7,000sq ft) overhead.

Incidentally, the new River Island store will be more spacious that BT2 on Grafton Street which is frequently cited as having the ideal configuration - its ground floor extends to 520sq m (5,600sq ft) and there is a further 445sq m (4,800sq ft) at first floor level. The rent of €1,181,000 goes to the ESB Pension Fund.

Michael Harrington of commercial agent HWBC, who handles lettings in the Ilac Centre, said he was unable to comment at this stage on the likely tenant for the the Ilac store.

Last week Dublin City Council granted planning permission for the six retail units to be combined to create what River Island will be calling a "superstore".

While the letting will clearly be seen as a coup for Ilac's joint owners, Joe O'Reilly of Chartered Land and Irish Life, it will undoubtedly be a severe blow to Arnotts who had obviously been banking on having River Island as one of the top franchises in their planned €750 million Northern Quarter retail development. An Bord Pleanála has already cleared the way for a scaled down version of the scheme which will cover a site of 5.5 acres stretching from Henry Street to Middle Abbey Street and from Penneys on O'Connell Street to Liffey Street.

River Island has been operating a highly profitable concession in the basement of Arnotts for many years and, because of the consistently high level of sales, was encouraged to expand its operation in Ireland in recent years. It now has 19 stores trading here including five in Dublin and two in both Limerick and Cork.

The joint owners of the Ilac have spent around four years assembling the site for the new store. They are thought to have spent well over €1 million buying in the leases of Champion Sports, Kylemore and Kiss along Mary Street and Fields Jewellers, Motive fashion shop and Simon Hart which is moving its shoe shop across the road to Liffey Street.

Footfall at the Ilac Centre has increased by 10 per cent since the completion of the major refurbishment and the linking in of Debenhams and Dunnes Stores into the complex. The remodelling of the entrance on to Moore Street Mall is being deferred until more progress is made on Chartered Land's plans for a €1.25 billion Dublin Central retail and residential scheme which will also extend over 5.5 acres around the former Carlton cinema site on O'Connell Street.

The opening of the highly spacious Zara and Debenhams stores on Henry Street and the plans for the new River Island outlet will give the street considerable edge over Grafton Street where attempts to amalgamate some of the smaller high street shops have been stymied by vested interests. Rents on the street have been increasing by up to 50 per cent in rent reviews over the past two years because of the large number of overseas fashion multiples seeking representation on the street. A new report out today shows that Grafton Street remains the fourth most expensive retail location in Europe with rents of €4,951 per sq m (€460 per sq ft).

That may well change over the coming year as ever more multiples revise plans for further expansion because of a dramatic slowdown in consumer spending as a result of fears of a major recession. Several leading traders already committed to opening new stores on both high streets and in shopping centres are finding it increasingly difficult to get funding for fit-outs and stock.

There has also been a marked fall off in demand for leases coming on the market since the start of this year.