The coffee giant will find it hard to assign the leases of its outlets in Ranelagh, Dalkey and Tallaght where its rents seem high and 20-year leases are in place, writes JACK FAGAN

THE GIANT Starbucks coffee company will learn a few realities of the Irish property market shortly when it attempts to assign the leases of five recently opened coffee outlets in the Dublin suburbs.

The company has about a dozen other coffee shops in the Dublin area, including its main one in College Green.

CB Richard Ellis has been given the unenviable task of finding replacement tenants for premises in Ranelagh, Dalkey and Tallaght where the rents seem on the high side. Even worse, Starbucks has signed 20-year leases from last year in all three cases and, with covenants of this calibre scarce on the ground, the landlords concerned are unlikely to let the American trader off the hook any sooner than the 15-year break options included in the leases. Starbucks has also closed its coffee shops at newsagents Hughes Hughes in Dundrum and Swords.

Starbucks wants out of “affluent” Dalkey immediately where it rents the former Dalkey Dispensary on Castle Street for €110,000 a year. It is equally anxious to assign its lease of a two-storey modern coffee shop at The Triangle in Ranelagh where it is paying an even higher rent, €131,622, a year.

Starbucks has also had second thoughts about its branch in Tallaght where it is leasing a ground floor retail unit of 257sq m (2,772sq ft) in Tallaght Cross East at an annual rent of €155,000 or 10 per cent of gross turnover, whichever is greater. The rent is one of the few bright spots in the troubled property portfolio owned by Liam Carroll.

On top of the rent, Starbucks also pays rates: €15,300 in Dalkey; €11,259 in Ranelagh; and (wait for it) €23,905 in Tallaght. The three leases are subject to five yearly rent reviews.

A marketing expert familiar with the Starbucks operation says that, to maximise earning potential, the coffee shops need to attract a good mix of office workers, shoppers and students. “If one element is missing, the shop is immediately under pressure.”

With Starbucks locked into leases until 2023 in all three cases, it is hardly surprising that it is no longer expanding as aggressively as in the past.

The company said yesterday it remained committed to the Irish market with a stronger store portfolio focused on providing the best possible service and value to their customers.