More than 160 traders at The Square Shopping Centre in Tallaght, Dublin 24, are facing rent increases of between 40 and 50 per cent under a five-year review due to take place over the coming weeks.
The revision will coincide with the ending of double rent tax allowances which have provided significant savings for traders over the past decade.
The size of the rent increases will not be finalised until agents Jones Lang LaSalle and Palmer McCormack have completed discussions with the 40 owners of the centre, which include AIB Investment Managers, Bank of Ireland Asset Management, Dunloe Ewart and businessman Ken Rohan.
Once a consensus has been reached, the two agents will notify tenants of the size of the increases to be sought. The issue will go to arbitration unless an agreement can be reached.
The Square is currently producing a rent roll of £6 million from 160 shops with a net floor area of 420,000 sq ft.
Traders will obviously fight any significant rise in rents as a result of much increased competition from Liffey Valley and Blanchardstown Town Centre. Surprisingly for a centre so large, there is only one unit vacant, since Dixons relocated to a larger shop.
Zone A rents in The Square average around £85 per sq ft. However, the management will undoubtedly cite the recent letting of a shop to fashion retailer No Name at £145 per sq ft for Zone A to justify an overall increase.
With average rents ranging from £50 per sq ft to £60 per sq ft, a typical shop with a floor area of about 1,000 sq ft will have its rent increased from £60,000 per annum to £84,000 if the management succeeds in having a 40 per cent rise implemented.
In another recent letting, a new tenant agreed a rent of £75,000 for a unit of 890 sq ft, equating to £84 per sq ft. All tenants pay an annual service charge of £5 per sq ft.
The owners of The Square are expected to argue that trading has improved considerably since the last rent review, due in part to the arrival of Boots and NEXT. The centre is now attracting more than 15 million visitors annually.
The opening of Tallaght Hospital has brought an additional 2,000 workers into the area, while the completion of South Dublin County Council's 60,000 sq ft of offices has also made a significant contribution to overall turnover.
The owners of The Square will have an opportunity to invest a further £120 million in the complex next year, following the granting of planning permission for a large extension. A local trader, Lowe Taverns, has lodged an objection with An Bord Pleanala.
Penneys has agreed purchase terms at around £12 million for a 60,000 sq ft store in the extension. The shop will take a large portion of the 152,000 sq ft of retail space approved.
The extension will also include 386 apartments, a 43-bedroom hotel, a 47-unit apart-hotel, a basement night-club and a multi-storey car-park with 1,529 spaces.
Rents in Blanchardstown Town Centre are also likely to rise substantially on the fifth anniversary next year. Retail trading was considerably slower when the centre was originally let by Green Property in 1996.
The Square and Blanchardstown have provided a serious challenge to city centre trading because of infinitely better parking facilities. High parking fees in city car parks have also proved a deterrent for shoppers.
