Retailers in the country's most popular shopping centre – owned by developer Joe O'Reilly – face a range of rent increases following arbitration, writes JACK FAGAN

ABOUT 100 of the 140 traders at Dundrum Town Centre in south Dublin are facing a broad range of rent increases – the highest being around 55 per cent – if a new arbitration finding is endorsed by management and tenants.

Owner Joe O’Reilly of Crossridge had sought rent increases of 60 to 85 per cent in a number of instances where tenants had been given preferential rental terms for committing to the centre up to three years before it opened in 2005.

Crossridge has indicated that it wants tenants, apart from the large anchor traders, paying a broadly similar rate for floor space. When both sides failed to reach agreement as part of the first five-year review, the management referred a number of cases to arbitration.

An independent arbitrator, Ray Lavelle of Jordan Auctioneers, has now recommended rent increases of 51.5 per cent and 55 per cent on two women’s fashion outlets, Oasis and Coast.

In both cases the landlord had sought increases of close to 80 per cent. The two businesses trade out of fairly similar shops of around 185sq m (2,000sq ft), Oasis on level two and Coast on level one.

The arbitrator has recommended that the Oasis rent should be increased from €209,868 to €317,952 and that Coast should now pay €324,850 as against the passing rent of €210,000.

On a broader scale, the first arbitration finding puts the new Zone A rent on level one at € 3,650 per sq m (€339 per sq ft) while the rate on level two has risen to €3,600 (€334 per sq ft).

Although Dundrum is by far the busiest shopping centre in Ireland, its Zone A rents look like ending up lower than in the Jervis shopping centre in the centre of Dublin and other centres at Blanchardstown and Liffey Valley.

The equivalent rent at Blanchardstown is €4,000 per sq m (€371.60 per sq ft) while the rate both at Jervis and Liffey Valley is €4,500 per sq m (€ 418 per sq ft).

The owners of Dundrum had hoped to get the Zone A rent up to the same level as in Jervis and Blanchardstown.

Crossridge is still awaiting findings from a second arbitrator, David Gill, who has been studying new rental demands in respect of a number of stores, notably A Wear and French Connection.

The landlord has been seeking a rent increase of around 70 per cent on the 510sq m (5,500sq ft) A Wear shop which is currently rented at €385,000 per annum. It is understood that a 50 per cent increase was sought in the case of French Connection.

Chartered Land, asset managers at Dundrum, said that the new rents for Dundrum had been set following independent arbitration entered into by both the centre and the tenants.

“The new rents are 2010 market rents and are up to 25 per cent lower than at the peak in 2007.”

The company said that in looking at the new rents it had to be remembered that the existing rents were agreed some seven or eight years ago. The market had determined the new rent level based on the success of Dundrum as an attractive shopping venue and the continuing strong retailer demand for representation.

Anchor tenants, who normally pay less per sq m because they trade from large floor plates, are also facing rent increases backdated to last January.

But they will be nothing like the 85 per cent jump sought from traders such as Lifestyle Sports, Fields Jewellers and The Body Shop.

Lifestyle is currently paying €375,000 for 385sq m (4,150sq ft) on level one while Fields Jewellers pays €255,000 for 141sq m (1,525sq ft) on level two. The Body Shop trades out of a unit of 77sq m (835sq ft) on the same level, paying €115,000 per annum.

The House of Fraser is paying an annual rent of €2.4 million for its 13,000sq m (140,000sq ft) store; Marks Spencer is thought to be paying around €2 million for 11,612sq m (125,000sq ft) while Penneys probably has a rent bill of around €1.5 million for its 5,574sq m (60,000sq ft) unit.

International trader Zara originally agreed to pay a basic rent plus a percentage of its turnover but because of the success of its operation it has now opted for a standard rent.

HM is still paying an agreed rent as well as a share of its turnover.

The Dundrum centre is by far the largest property asset in the group of companies controlled by Joe O’Reilly, whose property loans have been transferred to Nama.

The shopping complex, including the former shopping centre on the opposite end of Dundrum village, is understood to be producing a rental income in the region of €55 million.

It is by far the most valuable property under Nama’s control.

Dundrum’s decision to seek a new round of rent increases is at variance with trends in the city centre as well as in most provincial shopping centres. Landlords generally have been under pressure to reduce rents because of the sharp fall-off in consumer spending as a result of the loss of job security and an absence of credit.

Dundrum continues to buck the trend by attracting an ever- increasing number of shoppers.

The centre had a footfall of 19 million last year, a great many of them from the affluent south Dublin suburbs.