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Businesses finding ways to beat upward only rent reviews




Fides

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Interesting that "no creditors" were opposed, I wonder if he included the landlords. Having said that, they may have decided better to get the lower rent than have the store shutdown.
This is very much targeted at unrealistic rents. B&Q is set up as a separate limited company in Ireland so examinership is an option. Don't think it is an option for a branch (open to correction). Nice to see Landlords over a barrel. Just a pity as gd implies that the government were not at the forefront of this. Lower rents for the likes of B&Q and many others is part of the rebalancing of costs in our expensive little country.
 

wombat

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It seems to work for larger companies, I'm not sure it will work for an individual shopkeeper.
 

Fides

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It seems to work for larger companies, I'm not sure it will work for an individual shopkeeper.
I suspect it's not cheap but the payoff for the larger retailer makes it worth it. The difficulty for smaller retailers is there are probably personal guarantees in relation to rent which undoes the limited liability of the business.
 

gerhard dengler

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I'm no supporter of landlords - but it needs to be pointed out that, for example, a lot of pension funds invest their cash in property/land.
Companies like Irish Life and Aviva will make such investment decisions on the basis of rent return.

The rent/lease roll from these investments help feed returns for those pension/wealth funds.
 
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oggy

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Did I get it right, B&Q are closing 2 branches and seeking rent downwards reviews for two more. Would actually love to know who exactly are the landlords for the 6 branches they have
 

Fides

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Did I get it right, B&Q are closing 2 branches and seeking rent downwards reviews for two more. Would actually love to know who exactly are the landlords for the 6 branches they have
They want to close Waterford and Athlone. As GD points out many of the Landlords are pension companies. Rents in Ireland need to come down and it will happen over time. As new leases are issued they will be at lower rents than old ones. Old leases will expire. Most are 20 years these days (used to be 35 years) and many have break clauses. It's a bit like everything else here we keep delaying taking the hits that will eventually have to be taken.

The knock on effect of closing Athlone and Waterford is competitors will pick up the business of the closed stores so Woodies will benefit there which will help their survival chances.
 

Glenshane4

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I'm no supporter of landlords - but it needs to be pointed out that, for example, a lot of pension funds invest their cash in property/land.
Companies like Irish Life and Aviva will make such investment decisions on the basis of rent return.

The rent/lease roll from these investments help feed returns for those pension/wealth funds.
That is probably the real reason why the government has not tried to introduce legislation to invalidate those contracts of rent.
 

Davidoff

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That is probably the real reason why the government has not tried to introduce legislation to invalidate those contracts of rent.
It's also the case that, courtesy of NAMA and the banks, no one has a greater exposure to commercial property than the State itself.
 

Fides

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It's also the case that, courtesy of NAMA and the banks, no one has a greater exposure to commercial property than the State itself.
Indeed, not impossible a couple of B&Q's Landlords are in Nama.
 

damus

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Funny, I had this discussion with my number cruncher earlier today. Yesterday, I learned that there was a shop (part of a chain) shutting in three wks down to the high rental costs in one of the newer shopping centres. In the last couple of weeks they also lost an optician with HMV also likely to head the same way. There's also a fair few vacant units in the newer part of same complex - and I thought to myself surely it would be much better to reduce the rent per sq foot rather than having all these units lying idle and yielding no rent because what you are charging is actually far too high.
 

Fides

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Funny, I had this discussion with my number cruncher earlier today. Yesterday, I learned that there was a shop (part of a chain) shutting in three wks down to the high rental costs in one of the newer shopping centres. In the last couple of weeks they also lost an optician with HMV also likely to head the same way. There's also a fair few vacant units in the newer part of same complex - and I thought to myself surely it would be much better to reduce the rent per sq foot rather than having all these units lying idle and yielding no rent because what you are charging is actually far too high.
A friend of mine was forced out of a unit he had rented for over a decade in a fairly high profile shopping centre. Business had fallen and he could no longer afford the rent which had shot up during the boom. Even in 2007 as the bust loomed they upped his rent by 20%. The unit is till empty two years later, he has recently reopened elsewhere in a much cheaper unit (still a brave man imo). Basically they told him if they reduced his rent they'd have to reduce everyone's. But the reality is that is what will happen over time. Just delaying the inevitable - again!
 

seabhcan

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I'm no supporter of landlords - but it needs to be pointed out that, for example, a lot of pension funds invest their cash in property/land.
Companies like Irish Life and Aviva will make such investment decisions on the basis of rent return.

The rent/lease roll from these investments help feed returns for those pension/wealth funds.
The pension funds are the root of a lot of our economic problems.
 

Didimus

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It seems to work for larger companies, I'm not sure it will work for an individual shopkeeper.
It will work for anyone who knows that the landlord cannot find an alternative tenant to pay the current rent.
 

EndDiddlyaism

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Did I get it right, B&Q are closing 2 branches and seeking rent downwards reviews for two more. Would actually love to know who exactly are the landlords for the 6 branches they have
The Galway B&Q is in a centre owned by NAMA as the original developer / builder (Moritz / Rumbold) went wallop with massive debts.
 

dizillusioned

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A friend of mine was forced out of a unit he had rented for over a decade in a fairly high profile shopping centre. Business had fallen and he could no longer afford the rent which had shot up during the boom. Even in 2007 as the bust loomed they upped his rent by 20%. The unit is till empty two years later, he has recently reopened elsewhere in a much cheaper unit (still a brave man imo). Basically they told him if they reduced his rent they'd have to reduce everyone's. But the reality is that is what will happen over time. Just delaying the inevitable - again!
In 2007 he did well to have only a 20% increase. Most were 100% from 2001 to 2008. The other costs that landloards screwed many tenants on was "service charges", having done an investigation for a friend on the figures, it was amazing what actually was charged and what went "missing" on large complexes.
 

Fides

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In 2007 he did well to have only a 20% increase. Most were 100% from 2001 to 2008. The other costs that landloards screwed many tenants on was "service charges", having done an investigation for a friend on the figures, it was amazing what actually was charged and what went "missing" on large complexes.
I lease a unit in a business park, just about to move. But the tenants/owners took over the management of the business park (basically they refused to pay the service charge and the developer gave up). Service charge is now less than half what it started at and you can actually see the results of where the money is spent.
 

Killerbank

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The pension funds are the root of a lot of our economic problems.
So says declared Labour supporter "seabhcan". The fact is that the Government have renegued on its pre-election promise to abolish upward-only rent reviews. This is at the root of the crisis in retailing and the direct cause of many retail company failures eg HMV Korkys etc.
 

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