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High retail rents costing jobs, say stores

High rents for retail stores are costing jobs, company owners have said. A review by Retail Excellence Ireland said that rents were reduced by nearly 4 per cent over a two-year period, while 50,000 jobs were lost in the sector.

Image: Danny Lawson/PA Wire/Press Association Images

RATES CHARGED BY commercial landlords are costing jobs, retail owners have said.

According to a survey by Retail Excellence Ireland, commercial landlords “have not reduced retail rents to even close to market rates and Government action to abolish upward-only rent is urgently required”.

Their research conducted with 1,418 leasehold retail stores nationwide found that over the period 2009-11 rents were reduced by an average of 3.83 per cent.

It notes that over the same period, retail industry sales decreased by 30 per cent and over 50,000 retail jobs were lost, with employment in the sector falling to 255,000.

The survey showed that in 2009 an average rent reduction of 3.161 per cent of all lease rents was granted by landlords.

This increased to 4.399 per cent in 2010, and increased marginally to 4.402 per cent in 2011.

Over the three year period a total rent roll of €680 million was paid by the 1,418 stores or €479,000 per store (€159,000 per year).

Gross rent reductions granted over the period amounted to €27 million or €19,000 per store (€6,300 per annum).

David Fitzsimons, Chief Executive of Retail Excellence Ireland said the survey “is clear proof that the vast majority of commercial landlords have no intention of adjusting rents and are desperately holding on to celtic tiger lease agreements”.

What is most concerning is the fact that new market entrants can command rent at rates 50 per cent lower that legacy tenants, thus many long-established professional retailers are being forced out of business.

He claimed the vast majority of landlords “have proven that they are unwilling to reduce commercial rents to rates reflecting the market reality”.

He added:

Over the period 2000-07 [there were] rent increases of 240 per cent while consumer prices only increased by 30 per cent during the same period.
Irish retailers only want a level playing field and rents that are based on real market conditions.
It is now up to the Government parties to stick to their election commitments and publish the Landlord and Tenant (Business Leases Review) Bill. If the Government fails to act urgently on the rents issue they will be putting a further 30,000 retail jobs at risk.

In April of this year, Minister for Justice Alan Shatter outlined plans to end upwards-only rent reviews for existing leases.

Today, a spokesperson for his department said that discussions are ongoing in relation to this, but a statement was expected to be made on it in the near future.

Retail Excellence Ireland said the review initiative could create 20,000 retail jobs.

Read: Retailers step up Grafton Street banner war on high rents>

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