The sale of the River Island and adjoining Wallis stores is the largest ever deal of its kind on Grafton Street, writes Jack Fagan

The Dublin property developer David Daly has paid €115 million for two major retail investments on Grafton Street - the River Island store and the adjoining Wallis outlet.

It is by far the largest ever sale of a retail investment on Dublin's premier shopping street.

The double-fronted River Island store was sold by Arnotts while the building next door has been owned for many years by Arnotts staff pension fund. The deal will show a return of 2.4 per cent when the rents of both buildings are reviewed next year.

Daly's company, Albany Homes, is one of the largest housebuilders in the Dublin area. Its success has allowed him to assemble a substantial personal property portfolio including the second phase of the Airside Business Park near Dublin Airport and commercial properties in other parts of the city including Ballsbridge and St Stephen's Green.

A breakdown of the transaction has not been provided but it is thought the pension fund secured over €30 million for the Wallis building, putting a value of €80 million to €85 million on River Island.

The remodelled store was first offered for sale on the open market at the end of 2003 when Arnotts looked for over €50 million for it after agreeing a new Zone A rent of €13,751 per sq m (€1,275 per sq ft). There were no takers, largely because of a perception that it was over-rented; the rent level was then more than double the going rate on the street. Other rents have been gradually creeping up in the meantime and, when US fashion multiple Tommy Hilfiger shortly signs a lease for its new store on the opposite side of Grafton Street, the Zone A rent will be in the same region as River Island's.

The trader is paying an overall rent of €2.1 million for the building which has retail use on three of the six floors. Wallis is currently paying a rent of €530,000 per annum.

A retail expert suggested last night that investors are prepared to pay premium prices for large stores because they could be run more efficiently with fewer staff.

Fergus O'Farrell of Savills HOK, who advised Daly, described River Island as "one of the finest properties on Grafton Street" with a large retail floorplate - the ground floor alone extends to 321.4sq m (3,460sq ft).

Another senior executive of Savills HOK, Aidan O'Hogan, is advising Arnotts on the development of the planned €1 billion "North Quarter" in Henry Street.