Retailers at the Pavilions are facing substantial rent increases - but the eventual Zone A rates will still be a long way behind those at the Liffey Valley centre, writes Jack Fagan.
TRADERS AT the Pavilions shopping centre in Swords, Co Dublin, are facing rent increases of between 60 and 100 per cent as the latest general rent review moves towards completion.
The setting of new rent levels coincides with plans to embark on a major extension of the centre, which has been attracting considerably more shoppers since the start of the year.
Planning permission is to be sought later this year for an additional 65,030sq m (700,000sq ft), bringing the overall size of the shopping area to 111,480sq m (1.2 million sq ft).
The general review of rents in the centre - overdue since April 2006 - is only now being wrapped up because of a change of ownership in the meantime.
Property developer Joe O'Reilly of Chartered Land bought the complex in July 2006 for €575 million and later sold on a substantial interest in it to Irish Property Unit Trust and Irish Life for around €240 million.
Average Zone A rents on the ground floor of the centre are being increased from €1,506 to €2,529 per sq m (€140 to €235 per sq ft) while similar rents on the upper floor are moving up from €1,291 to €1,991 per sq m (€120 to €185 per sq ft).
About four or five tenants are apparently planning to refer the rent reviews to arbitration.
A number of reviews due from earlier this year have also been agreed on the ground floor at a Zone A rate of €2,691 per sq m (€250 per sq ft).
This is still a long way behind rents at the Liffey Valley shopping centre, where the Zone A rate averages €3,900 per sq m (€362 per sq ft). Some of the more recent lettings were even higher, at €4,843 per sq m (€450 per sq ft).
The better-than-expected rent settlements in the Pavilions will push the overall rent roll close to €13 million.
This will be of direct benefit to Mr O'Reilly, who sold on part of the investment to IPUT and Irish Life on the basis of a guaranteed rent of €8.3 million for the first five years.
The improved return is due in part to the strong demand for space in the second phase of The Pavilions, where the main tenants are Zara, Bertoni, Esprit, Diesel and Tommy Hilfiger.
Four other equally strong tenants lined up for the remaining units at the centre are due to complete contracts in the coming weeks.
Des Byrne of Bannon, who is handling the rent reviews for the landlords, says the centre is trading well because of strong anchors and a good tenant mix as well as the multiplex 11-screen cinema.
The focus of the owners was to develop the Pavilions as a destination/regional retail centre for the M1 corridor, he said.
The enhanced retail offering has led to an increase in the number of shoppers, from 160,000 to over 200,000 per week in the first six months of this year, according to Paul Fahy of Bannon.
