TENANTS AT Dundrum Town Centre in Dublin face rent increases of up to 100 per cent, putting the future of more than 20 Irish retailers at the development at risk, according to industry body Retail Excellence Ireland (REI).
Several retailers have gone into arbitration after they received five-year rent reviews from Dundrum landlord Chartered Land demanding an increase in rent.
REI chief executive David Fitzsimons said increases secured at Liffey Valley and Blanchardstown before the collapse in both the property market and retail sales were being used as the justification for increases at Dundrum.
“Those rents were set just prior to recession and they are untenable,” Mr Fitzsimons said. “Upwards of 20 tenants are being put at risk of failure,” he added.
Some Dundrum food operators, who hold leases of four years and nine months, have already settled, while of the general retail tenants, around half are understood to have received notices stipulating increases. On Monday, Pepe Ireland blamed its plan to shut down on unrealistic rents. Its owner Sunil Shah said Dundrum, which was built by developer Joe O’Reilly, was seeking a 35-40 per cent rent hike, which would drive his business there to insolvency.
One retailer told The Irish Times that the rent increases made it “unattractive to do business in Dundrum”. Based on an 18 per cent average increase, Dundrum has slipped from first to fifth in REI’s shopping centre “productivity” index, which compares the cost of doing business against revenues. Another Dundrum retailer said he had been asked for a 100 per cent increase, despite business being lower now than when the development opened in 2005.
“We’re now counting on the Labour policy – that could change things,” he said. Labour Party TD Ciarán Lynch has indicated it will retrospectively ban upward-only clauses in rent contracts if elected.
Mr Fitzsimons said there was “confusion” about the Government’s position on rents. It has banned upward-only rent reviews on contracts signed from March 2010. However, developers whose assets have transferred to the National Asset Management Agency can make their business plans more attractive to the State agency if they maximise the future rental income on their assets.
Rod Nowlan, a director at Bannon property consultants, which is one of the agents at Dundrum, has written to Mr Lynch to say the policy could “wipe out literally billions of euro of value, the burden of which would ultimately fall on the Irish people”.
