Rise in occupancy rates at shopping centres
Print15 September 2010
Landlords are still charging ‘penal’ rates to long term landlords yet giving ‘sweet deals’ to new tenants to try to coerce them to commit to a lease. This is according to a productivity review of Ireland’s main shopping centres, published by Retail Excellence Ireland (REI) which revealed that occupancy rates have increased in the past 15 months while rent has reduced by over 4% on average. However, the 2010 review also reveals that a two tier lease system is now in operation at most shopping centres throughout the country, with long-term lease holders paying boom-time rent while new leaseholders enjoy current market prices.
The review, which measures rent, service charge, footfall, and occupancy, found Blanchardstown Centre in Dublin to be the most productive in 2010. This was up from fourth place last year, mainly due to a favourable rent versus footfall score, which accounts for 50% of the total. Castletroy Shopping Centre in Limerick was found to be the least productive retail precinct in the country – remaining static at 42nd place from 2009 – largely down to lost tenants and tough competition in the area.
Chief executive of REI, David Fitzsimons, said that the review reveals that “landlords are now operating a two-tier lease system, continuing to charge long-term lease holders penal rates while offering sweet deals to new operators just to get them in the door”.
“The problem with this inequitable approach is that existing tenants cannot compete with new tenants, who benefit from current market rent and therefore lower operating costs.
“The slight improvement in occupancy levels is a direct result of new tenancy, somewhat masking the true closure rate suffered by many scheme owners in the last 15 months. Landlords are compromising existing tenants by letting available units to a weaker tenant mix, resulting in a diluted and confused retail offer to customers,” said Fitzsimons.
The review also found that rent has reduced by an average 4.45% compared with March 2009. Occupancy rates have increased to 86.15%, up from 84.95% in March 2009.
A breakdown by region shows that Dublin records the best occupancy rates (89.68%) followed closely by Galway (89.41%), Cork (88.51%) and Waterford (85.03%) while Limerick trails behind at 67.34%.
However, when it comes to rent reductions, Dublin schemes rank lowest. The biggest upward movement for the annual ranking was recorded for: Scotch Hall SC, Co. Louth (up 16 places to 6); Eyre Square SC, Co. Galway (up 11 to 7); and Athlone Town Centre, Co. Westmeath (up 12 to 27).
The biggest downward movement was recorded for: Douglas Court SC, Co. Cork (down 19 places to 31); Wilton SC, Co. Cork (down 11 to 24); and Golden Island SC, Co. Westmeath (down 9 to 18).
In August REI welcomed the report of a working group set up to look at commercial rent reviews, which has been published by the Minister for Justice and Law Reform, Dermot Ahern.
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