Why not much mention of rents in this high cost country?

changes

People complain often at the high cost of everything in this country.

I was reading the sunday indo and came across an article on rents on grafton street. Absolutely crazy money being paid. I remember another story of a busy shoe shop in letterkenny barely able to survive due to the massive rents they have to pay the landlord.

I'd hazard a guess that it is the same over much of the country.

A 20% reduction on rents would do wonders for the cost of doing business here.

Who are these landlords and can nothing be done to force down the cost?

Welease

Ben Dunne was interviewed on the radio a couple of weeks ago (Newstalk) and was asked his opinion on the rents being charged to companies with Grafton St. being specifically mentioned..

His response?.. the people who signed those contracts were idiots and only have themselves to blame..

I'm inclined to agree with him..

silverharp

you will probably see alot more of this. Either alot of closures to get out of onerous leases or landlords start making deals.



http://www.rte.ie/business/2010/0203/carluccio.html

Carluccio's, which specialises in Italian food, has closed its doors to customers and laid off its 60 staff.
The Dublin cafe and delicatessen, which is located on Dawson Street in the city centre, has told staff it will not be able to re-open unless it can negotiate a new deal on rent with its landlord.
A statement from Carluccio's said its rent was struck near the peak of the property boom in 2007 and it had been seeking to reach agreement on a new deal since December 2008.
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It said it had succeeded in reducing other costs but had been unable to reach an agreement on rent. The company said it believed its business was viable if the rent issue could be resolved.
Carluccio's said its closure would also affect around 80 companies which currently supplied it.

Call for action on retail rents

Retail Ireland has called for Government action to reduce rents in the retail sector.
Retail Ireland Director Torlach Denihan said 30,000 people lost their jobs in the sector last year and many shop workers face redundancy unless rents are addressed.
He said retailers have been cutting prices in a bid to up consumer spending and combat cross-border shopping, but many are struggling against a background of falling sales and high rents.
Mr Denihan warned many smaller businesses could face closure, while larger to medium size retailers could be forced to cut staff.

dvpower

The guy who owns Korkys shoe shops was on the radio (Matt Cooper iirc) saying that his 900sq ft shop on Grafton street costs €10,000 per week.

He said that he has no possibility of turning a profit at that rate. When he first took the lease it was 1/5 of this but because of upward only rent reviews it just kept rising. His landlord, Canada Life would prefer to see him go bust than set a precedent of renegotiating.

He did mention some Labour party private members bill that would allow rents to fall to market values.

It seems bizarre that jobs and people are being put on the dole from businesses that would otherwise be viable if the market wasn't rigged.

gandalf

Yep between this and the total lack of credit from the banks otherwise viable businesses are being forced over the edge.

doc_17

It's outrageous that this is being allowed to happen. Like others I feel that they were crazy to sign up in the first place but upward only rent is stupid.

Atlantic Dawn

What would happen in a normal country is the market would decide and someone would build a massive shopping centre on cheap land and set rent at a third of what shops are paying now and would have lines of retailers wanting to join it, Ireland however has NAMA who's sole aim is to maintain these high rent and property prices.

gandalf

Atlantic Dawn wrote: »

What would happen in a normal country is the market would decide and someone would build a massive shopping centre on cheap land and set rent at a third of what shops are paying now and would have lines of retailers wanting to join it, Ireland however has NAMA who's sole aim is to maintain these high rent and property prices.

You've hit the nail on the head with that comment. One of the by products of NAMA is maintaining high prices and rents.

changes

I wonder if there are many politicians renting out premises to businesses also.

hmmm

Welease wrote: »

Ben Dunne was interviewed on the radio a couple of weeks ago (Newstalk) and was asked his opinion on the rents being charged to companies with Grafton St. being specifically mentioned..

His response?.. the people who signed those contracts were idiots and only have themselves to blame..

Idiots is a bit harsh but they have agreed to sign a contract which leaves them exposed. All markets are ultimately self correcting if politicians stop mucking around in them.

tedstriker

Lots of property that is rented out is paid for by investors and many investors are pensions funds. If the rents were dropped then people would see the values of pensions, bonds and other investments held by the average person drop with it. Government would love to help bring the price of rental property down but it would actually kick the public where it hurts even more. I think that they are hoping that things turn a corner slightly before they go into this area, the irony of course is that the corner is further away because business cannot afford these high rates.

I also tend to agree that the price of units in Ireland is ridiculous and in some case people have nobody to blame but themselves, deluded expectations and access to easy cash allowed many unsustainable business to open. The bad thing is that good businesses will go with the bad. habitat near trinity was probably the first to get stung by this. In any other city it would have survived if rents were normal but not in Dublin and now the place has been idol for well over a year or so.

It will all change though. Supply, demand, supply, demand.

gandalf

tedstriker wrote: »

Lots of property that is rented out is paid for by investors and many investors are pensions funds. If the rents were dropped then people would see the values of pensions, bonds and other investments held by the average person drop with it. Government would love to help bring the price of rental property down but it would actually kick the public where it hurts even more. I think that they are hoping that things turn a corner slightly before they go into this area, the irony of course is that the corner is further away because business cannot afford these high rates.

Yes but at the expense of job losses its a false economy. Rent rates have to be dropped to a level that makes businesses sustanable otherwise our high streets will be ghost towns. It makes more sense for these investors to have someone paying rent surely than having a vacant property?

zootroid

Article from the independent:

A LEADING restaurant has blamed exorbitant rental costs for forcing it to shut, with the loss of 60 jobs.

The closure of well-known Italian cafe Carluccio's, on Dublin's Dawson Street, came just as industry body Retail Ireland demanded Government action to reduce business rents.

Staff were informed that Carluccio's will only reopen if an attempt to renegotiate the rent proves successful.

Retail Ireland's director, Torlach Denihan, warned: "Landlords are not doing enough to cut rents, and the Government has yet to take action to reduce this cost burden."

Carluccio's Ireland, which is a franchise of the Carluccio's chain of cafes, currently serves more than 5,000 customers a week at the Dawson Street outlet.

A spokesman said he believes the food outlet would be a viable business if the rent issue can be resolved.

More than 30,000 people lost their jobs in the struggling retail sector last year.

http://www.independent.ie/business/irish/successful-cafe-shuts-down-over-exorbitant-rent-2047404.html

I would love to see the rent, just out of curiosity.

Upward only rent reviews was a complete joke, but I think something is being done about it. Maybe the government could go a bit further and introduce rent control?

I'm not sure rents will come down as fast as people would like them to, and it is in the government's interest to do something about it. The vast majority of the country's economic problems stem from property in one form or another.

Japer

tedstriker wrote: »

Lots of property that is rented out is paid for by investors and many investors are pensions funds. If the rents were dropped then people would see the values of pensions, bonds and other investments held by the average person drop with it. Government would love to help bring the price of rental property down but it would actually kick the public where it hurts even more. I think that they are hoping that things turn a corner slightly before they go into this area, the irony of course is that the corner is further away because business cannot afford these high rates.

Some rents now are very reasonable. Rents are sizeable amounts too in other countries. I know of some property being rented for a lesser return on capital than the landlord would get for money on deposit in the bank, without any hassle + less risk. The downward pressure on property has caused many pension funds to fall, and left some people who were dependent on property for their pension facing a very bleak future.

Sleepy

It's still artificially high in the residential sector too.

I'm looking to move at the moment and there are very few 3 bed properties in Dublin below €1100 per month, regardless of conditon.

I wonder if this has anything to do with the fact that Rent Allowance will pay a maximum of €1100 per month for a 2 parent, 2 child family?

It's sickening for someone looking to rent as if I were prepared to buy, I could get a 35 year mortgage for similar properties to some of the ones I'm looking at for about €200 less a month than the rent. I know that the house prices have yet to drop fully and am hoping to have a deposit together by the time the trough is reached but it's still galling to be paying so much in rent that it covers someone's over-sized mortgage.

Idbatterim

what arrangements are in place in other EU countries in regards to commercial rent?

ballinatray

tedstriker wrote: »

Lots of property that is rented out is paid for by investors and many investors are pensions funds. If the rents were dropped then people would see the values of pensions, bonds and other investments held by the average person drop with it. Government would love to help bring the price of rental property down but it would actually kick the public where it hurts even more. I think that they are hoping that things turn a corner slightly before they go into this area, the irony of course is that the corner is further away because business cannot afford these high rates.

I also tend to agree that the price of units in Ireland is ridiculous and in some case people have nobody to blame but themselves, deluded expectations and access to easy cash allowed many unsustainable business to open. The bad thing is that good businesses will go with the bad. habitat near trinity was probably the first to get stung by this. In any other city it would have survived if rents were normal but not in Dublin and now the place has been idol for well over a year or so.

It will all change though. Supply, demand, supply, demand.

This is the difficulty with the irish property market , supply and demand economics was criminally manipulated...There is a vast over supply in every area from residential, to retail to warehousing and office space...Nama will now coral all this excess to maintain that false valuation..Many of the institutional investors you refer to were equally lacking in foresight in these investments and their carelessness has done more to destroy pension value than anything else...

Niall Keane

Had an interesting but brief conversation with an acquaintance that runs a gym in the city centre. He had wanted to buy it outright, the developer who had owned it has gone into receivership, but the receiver acting on behalf of the bank involved has told him that the bank are not interested in selling at least until 2012 when they expect a return of commercial prices.
I.e. our money is allowing the banks to hold on to property as they no longer need to release capital. I wonder how many empty premises are in this situation. Any business owners noticed easier access to credit yet? After all NAMA is forgiving the term "money in the bank" a done deal?