Are retail rents too high in Ireland?

[Protocol]

I think that one reason for the very high consumer price level in Ireland is excessive retail rents.

Here is one recent example:

Commercial property for sale in Unit 216, Eyre Square Shopping Centre, Galway City Centre, H91FH90

Commercial property for sale on Unit 216, Eyre Square Shopping Centre, Galway City Centre, H91FH90 is now on Daft.ie.

www.daft.ie

• Unit 216 Eyre Square Shopping Centre is an internal retail mall unit located on Level 2 (First Floor)
• 116 sq.m (1,249 sq.ft) NIA
• The property is let to Now Newsagents Ltd t/a The Card Shop subject to the terms of a 35 year lease agreement from 1 July 1991.
• The contracted rent under the lease agreement is €131,900 per annum, however the tenant is currently paying rent in the amount of €100,000 per annum.
• For sale, asking 1m euro

The rent is 2,536 per week, although the tenant is paying just under 2,000 per week.

This rent seems insanely high to me. I think they should be 75% to 90% less.

The actual rent paid per sq ft is 80 per year.

I had a quick look for retail rents in the UK:

Most Expensive Retail Rent In The UK | Real Business Rescue

Our data ranks UK cities and towns with the highest retail rental prices per square foot and compares footfall recovery data against rent per sq. ft.

www.realbusinessrescue.co.uk

Retail rental across the UK’s cities and towns ranged from an average of £49.64 per square foot per year at its most expensive, to £12.45 per square foot at its cheapest, on average.

Outside of London, Birmingham is the UK’s largest city in terms of population and it also ranks in position 32 as having the highest retail rental at £26.13 per square foot on average each year.



London is the most expensive, at just under GBP 50 per sq ft per annum. That's about 59 euro.

The commercial rent on the shop in Galway is 36% dearer than London. Why?

 

[Knuttell]

Presume if they lower the rents it will have a knock on on the resale value.

Likely your pension has exposure to Irish commercial property. So lower rents means lower returns on pensions(?)

Always remember the mantra when confronted with low level insanity....Ireland is different

I find it helps.

 

[Brendan Burgess]

• The property is let to Now Newsagents Ltd t/a The Card Shop subject to the terms of a 35 year lease agreement from 1 July 1991.
• The contracted rent under the lease agreement is €131,900 per annum, however the tenant is currently paying rent in the amount of €100,000 per annum.

The rent of €131k was probably set during the Celtic Tiger .

The lease expires in two years and the tenant will have the right to walk away at that stage if they cannot negotiate an affordable rent.

Brendan

 

[Protocol]

Presume if they lower the rents it will have a knock on on the resale value.

Likely your pension has exposure to Irish commercial property. So lower rents means lower returns on pensions(?)

Always remember the mantra when confronted with low level insanity....Ireland is different

I find it helps.

Bear in mind that pension funds may hold shares in the tenants paying the high commercial rents also.

So lower rents may mean higher profits for the tenants, or lower consumer prices.

 

[Dr Strangelove]

The contracted rent under the lease agreement is €131,900 per annum, however the tenant is currently paying rent in the amount of €100,000 per annum.

It seems wild that the rent is about the cost of three full-time shop employees.

 

[peemac]

UK figures are averages and will include poorly located stores and large stores. Usually a different barometer is used - Zone A, B and C. Zones are about 6m deep from the front. Anything after 18m is simply called the remainder.

Premium space in UK shopping centers will command big rent. Example is Blue water in Kent. 1300 sq ft unit in good position is £210,000. Rates are a horrendous £60,000 and service charges over £25,000. So about €350,000 all in before you open the shutter.

Dundrum would be similar, but rates would be about half of UK level.

That Galway shop would be worth 80-100k rent.

 

[Leo]

The commercial rent on the shop in Galway is 36% dearer than London. Why?

Is there a risk you're comparing one Galway example to the London Average? Especially as that one example is in one of the most sought after areas in Galway? If I used this other Galway example would wee suggest rates here are too low?