Friday, August 10, 2012

Upward only rent reviews are hollowing out town centres – O’ Connell

The Chairperson of County Wexford Sinn Féin has said that upward only rent reviews are leading to the hollowing out of town centres and the continuing decline of the retail sector. Speaking on local radio last week Oisin O’ Connell said that Irelands commercial lease laws had contributed to a 50% fall in retail sales and the loss of 40,000 retail jobs since 2008.

Mr O’ Connell said;

“Irelands commercial lease law is unique in the eurozone. Commercial leases rarely last longer than ten years in the rest of the eurozone and the US. This is down to standard competition, the provision of 3-6 years break clauses and index linking to the general economy. In Ireland we have a policy known as upward only rent reviews. Under existing lease law here a tenant has no right to appeal against a rent review awarded by a rent arbitrator.”

“In this state we saw commercial rents increase by 240% between 2000 and 2007 while during the same period the consumer price index increased by 30%. Clearly the rise of commercial rents was not realistic and cannot be justified in its current form.”

“Untenable rents have left many retailers under extreme pressure to continue trading and have directly contributed to the loss of 40,000 retail jobs and a 50% fall in retail sales. It’s obvious that these commercial reviews exist for the benefit of leasers, not tenants. This system is impacting on a weak retail sector, leading to more businesses closing, more unemployment and less new domestic retailers able to enter the market.”

“Walk around town centres today and what you will see is empty shop units and closing down sales. Many businesses are moving out of the rent rich town interiors into commercial parks. What we are seeing is the hollowing out of town centres.”

“The government needs to re-evaluate its policy on upward only rent reviews. The abolishment of upward only rent reviews would lead to a gradual reduction in commercial property yields, which would allow rent reductions for tenants and save thousands of jobs in the retail sector. It would lead to empty shops being occupied and new jobs being created.”

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