The ownership of two shopping centres is changing. Merchants Quay, in Cork city, has been sold to AIB Investment Managers and Friends First for almost £25 million and in Co Clare, sale terms have been agreed at £7.3 million for Shannon Town Centre.
Merchants Quay is being sold without the anchor stores and is currently producing a rental income of £1.75 million, giving the new owners a return of slightly over 6.5 per cent. All the rents were recently reviewed and average £70 per sq ft on the ground floor and £35 per sq ft on the first floor. The city centre complex was developed by O'Callaghan Properties just over 10 years ago and, apart from the anchor stores, has 50,000 sq ft of floor space on two levels. Dunnes Stores and Roches Stores both own their own units, while the Marks & Spencer store is held as an investment by Treasury Holdings.
Merchants Quay has been owned from the outset by Bank of Ireland Asset Management and Salix Trust, the bank's staff pension fund. Although the two groups drew up plans to provide a third trading floor on the complex to link in with one occupied by Marks and Spencer, they did not seek planning permission. The purchasers are now expected to proceed with this plan which would add anther 28,000 sq ft of space to the complex. It is also planned to refurbish the shopping malls.
Merchants Quay's location along Cork's main shopping pitch, Patrick Street, has ensured strong trading over the years. Zone A rents on Patrick Street are now around £140 per sq ft, making the street the most valuable in trading terms after Dublin's Grafton Street and Henry Street. The largest tenants in Merchants Quay are Laura Ashley (which is paying £188,000 for 4,000 sq ft on ground and mezzanine level); Adams Children's Wear (£150,000 for 3,216 on two levels); Cafe Kylemore (£92,850 for 4,415 sq ft on the first floor); Japan (£82,000 for 1,500 sq ft) and a newsagent (£80,000 for 1,500 sq ft). A more recent arrival, Boots, is paying £40,000 for 1,668 sq ft on the first floor. DTZ Sherry FitzGerald and Spain Courtney Doyle acted for the purchasers and Jones Lang LaSalle and Hamilton Osborne King represented the vendors.
At Shannon Town Centre, two investors have bid close to the asking price of £7.3 million for the 90,000 sq ft town centre, which is currently producing around £560,000 per annum. The rental income is expected to increase to around £670,000 when a number of rent reviews are completed. The centre is let under 57 leases to tenants including Tesco, AIB, Bank of Ireland, Xtravision, Supermacs, Paddy Power and Ulster Bank. Rent levels are still on the low side compared with other provincial shopping centres. Passing rents are around £9.95 per sq ft though recent reviews and new leases have seen rents move up to £15.33 per sq ft. Selling agents DTZ Sherry FitzGerald anticipate that the overall rent should rise to at least £740,000 when all the reviews have been completed by the end of the year.
Although the centre was upgraded in 1990, it has failed to trade anywhere near its full potential, largely because the owners allowed several strategically placed units to be rented by financial institutions and as offices rather than high street traders. This has greatly restricted the mix of tenants and reduced the appeal of the centre, which has been owned for many years by Sisk Properties. However, with the owners now planning to build a free-standing store for the discount supermarket chain Aldi, prospects for future trading will be greatly enhanced.
The continuing expansion of industry and employment in the Shannon region will also be a bonus for the town centre.
