Sir, – The issue of upward only commercial rents won’t go away, and suggesting that retailers simply “move on” (Cantillon, 25th November) appears to be pandering to the wishful thinking of a property sector in denial.
There seems to be broad agreement that the Irish upward-only rent clauses are bad for the economy, hence the reason they have now been outlawed by legislation. As a uniquely Irish mechanism they epitomised the worst excesses of an out of control property market. Given they are now outlawed by public policy, it seems hard to reconcile that they should be allowed to stand in existing leases.
In reality, present-day buyers of retail schemes – many of them foreign – will be well used to looking past the rent-roll financials and assessing the underlying health of the tenants contained within.
In cases where landlords have a “head in sand” approach what will buyers find? So there’s the rub. Property values are underpinned by the viability and vigour of the businesses that operate from them.
To be fair, some landlords of a more pragmatic nature have understood this, and deals have been done. But the music will stop for the rest, there will be more retail closures, a continued handbrake on some retail park values, and more jobs lost in Ireland.
Ironically those hurt most by these clauses were small but otherwise viable independent retailers, who are now either gone or circling the drain due to crippling rents. Sadly, their departure will further accelerate the demise of already suffering town centres.
Perhaps tomorrow you will use the same logic to write the companion article, “Negative equity costing homeowners, not the economy”.
This issue has not gone away, despite the hopes in some quarters that it will. – Yours, etc, BLAINE CALLARD CEO, Harvey Norman (Ireland), Brent House, Swords Business Park, Co Dublin.