Shopping Centres: Recent rent settlements have seen rents jump at Liffey Valley. Now the centre's owners face a challenge. Jack Fagan, Property Editor, reports
Almost 70 traders at Liffey Valley shopping centre in west Dublin are to face demands for a doubling of rents following recent rent settlements with new tenants.
The owners of the shopping centre on the M50 have bought in several leases over the past 12 months and relet the premises at considerably higher rents to reinforce their case when 40 of the reviews get underway shortly.
Despite the evidence assembled by the landlords, two test cases are to go to arbitration at the beginning of May. The findings by an arbitrator are expected to determine the size of rent increases that will apply in all other units. T J Kearns of Colliers Jackson Stops will be representing one of the tenants.
Agent Hamilton Osborne King has been actively managing Liffey Valley to build up the evidence it hopes will trigger a substantial increase in rents. The current Zone A rent of around €1,800 per sq m (€167 per sq ft) could rise to between €3,767 and €4,305 per sq m (€350 and €400 per sq ft) if the arbitrator accepts that the terms of some recent lettings should be used as a precedent.
However, buying in leases is not all about bumping up rents. It also allows landlords to freshen up the shopping centre by bringing in high profile tenants to replace others that may find the going tough or have decided to relocate to the high streets.
David Potter of Hamilton Osborne King and Strutt & Parker, who are handling the rent reviews for the landlords, Grosvenor Estates and Morley Properties, are expected to rely heavily on a letting last January of the former Ravel shop to La Senza at a Zone A rent of €4,090 per sq m (€380 per sq ft), easily the highest in the centre. The lingerie specialist is paying a rent of €395,000 for the shop which has a floor area of 222.86 sq m (2,399 sq ft) and a mezzanine of 160.8 sq m (1,731 sq ft). Another letting likely to be cited is the former Gazebo shop let to H Samuel last June at a Zone A rent of €3,121 per sq m (€290 per sq ft). A rent of €330,000 applies to the unit which has 157.9 sq m (1,700 sq ft) on the ground floor and a mezzanine of 111.4 sq m (1,200 sq ft).
Last October's letting of a store to A Wear at a Zone A rent of €3,896 per sq m (€362 per sq ft) is also likely to be referred to at the arbitration hearing. A Wear has 261.3 sq m (2,813 sq ft) on the ground floor and a mezzanine of 115.6 sq m (1,245 sq ft).
It is less likely that either side will rely on the letting of almost 2,787 sq m (30,000 sq ft) on two levels to Next which is due to begin trading in June. To accommodate Next, the landlords bought in four leases and, though the rent for the enlarged shop is around €1m, the deal was agreed a considerable time ago and is not expected to be mentioned in the upcoming arbitration. Next's former premises with 510.9 sq m (5,500 sq ft) on the ground floor and 278.7 sq m (3,000 sq ft) on the mezzanine is to be taken over by River Island at a Zone A rent of €4,090/€4,305 per sq m (€380/€400 per sq ft) and an overall rent of €850,000 per annum.
Another big player who will be monitoring proceedings is Boots, which is paying a rent of €720,000 for 2,415 sq m (26,000 sq ft) on the ground floor and 1,300 sq m (14,000 sq ft) at mezzanine level. Liffey Valley is trading exceptionally well but the owners will be anxious to continue to attract shoppers from the northside of the Liffey when high profile traders Marks & Spencer and Zara open shortly at the rival Blanchardstown Town Centre. Liffey Valley is the first of a new generation of shopping centres that does not have a conventional supermarket though it does have an M & S.
It is questionable whether the planners will allow Liffey Valley to be expanded given the disclosures at the Mahon Tribunal about the rezoning of Quarryvale in 1993. The centre has been capped at 23,225 sq m (250,000 sq ft) and the argument for enlarging it has not been helped by worsening traffic congestion on the M50.
