Ireland’s Justice Minister Dermot Ahern has threatened to legislate against upwards-only rent reviews unless landlords take a “flexible and pragmatic approach” to helping retailers through the recession as the country suffers its worst retail sales slump for 25 years.
The Justice Minister said last week he will bring in legislation providing for downwards rent reviews unless landlords show they are being flexible. A spokesman for the Minister said: “There is a growing awareness that, in current economic circumstances, rents need to be reduced if businesses are not to fail.”
Ahern said he has written to several firms in the retail property arena including surveyors, lawyers, pension funds and auctioneers, to urge them to consider alternative leases. The move followed the Minister’s meeting with Retail Excellence Ireland (REI), the body that represents some 8,000 stores.
REI chief executive David Fitzsimons said rent rises are the biggest contributor to business failure in the sector. He welcomed the prospect of new legislation, which he said “should outlaw all upward-only rent reviews”.
The recession has hit Ireland hard after several years of huge growth. The Central Statistics Office reported retail sales slumped 20 per cent last year. There are around six leases up for sale on Dublin’s premier shopping destination Grafton Street. Those leaving the street include Warehouse, Guess, Pia Bang and shoe retailers Korkys and Zerup.
REI has appointed Dublin property agency GVA Donal O Buachalla to handle rent negotiations on behalf of its members. It is understood to be seeking rent reductions of between 15 and 50 per cent. Other retailers are thought to be asking for turnover-based rents.
The Justice Minister will review the situation in the coming months.