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21 IRELAND Ulster retailers fear new levy

Northern Ireland Finance Minister, Sammy Wilson, recently launched a consultation on increasing the amount of rate relief for small businesses, funded through a levy on the largest retail premises. The Minister’s preferred approach for the large retail levy

would involve an average levy on rate bills of around 20 per cent. This would be applied to large retail premises with a rateable value of £500,000 or more. The proposal has been met with howls of protest from

the retail and property sectors. Jane Bevis, director of the newly-formed Northern Ireland Retail Consortium, said: “The tax being considered on large retail premises risks doing long-term damage to Northern Ireland’s town centres, employment figures and business reputation. We agree small retailers need a helping hand and that high streets need investment and regeneration. But this levy would also hit high street locations and be a disincentive to growth, doing more harm than good. “Retailers take into account the profitability and viability

of each store they open. There’s a danger a tax on specific premises will mean some stores don’t get opened or don’t get expanded. That’s a threat to growth and job creation at a time Northern Ireland needs it most. It could also have a knock-on effect for the tourism, food and manufacturing sectors. “Large retailers make a significant contribution to

Northern Ireland’s economy and to town centres across the region. They should be able to make an even bigger contribution in the future if ministers work with business to provide the right environment for companies to succeed. Large, successful retailers pay taxes, employ and train thousands of people and bring footfall to town centres, benefitting all businesses. The same cannot be said of vacant shop premises.” And from a property perspective Lisney director David

McNellis added: “This proposal may represent a rebalancing of the rating system, but does it address the interests of the wider economy and the changes in the property market? Rents have fallen, in many cases by over 50 per cent, so what we really need to see is a more fundamental rethink of the rating and rate poundage system that gives consideration to changes in rents across the board. “To end up in a position where the single biggest cost

to many retailers is their rates bill is, I think, unsustainable. There is a significant over-supply of retail space in Northern Ireland, particularly in secondary and tertiary locations, and this will remain an issue for the foreseeable future. Many landlords are receiving little or no rent at present but the rates bills still keep coming.”

And two political factors are currently clouding the decision-making

process for retailers. The new government came to power on a pledge to abolish upwards-only rent reviews but this has not yet been enacted. And equally the incoming administration has proposed rebasing all commercial rents to 2011 levels, in a bid to reduce the rent burden on occupiers, creating a new level playing field between businesses. “With the Dail in recess we won’t hear anything until the Autumn,” says

Brennan. And he points out that this is having a paralysing effect on the

investment market. “That market won’t come back until there’s debt finance available,” he says. “And who’s going to lend if there’s the potential for a rent decrease? “The frustration is that there is buyer interest. We’ll see some property

hitting the market in the Autumn, but will vendors accept what purchasers can afford to pay?” he asks. One source of investment stock could be NAMA – the ‘bad bank’ set

up by the Irish government to warehouse toxic loans. Until recently NAMA has consistently refused to confirm which borrowers or which properties are involved, although the list is widely believed to form a roll-call of Ireland’s top property names and some of the country’s highest-profile schemes. However it has recently published a list of properties where it is

now taking enforcement action against the borrowers. Inevitably it is a mixed bag of property types and locations across Ireland and the UK, but the list did include the Rushbrooke Centre at Cobh in Cork; Croughwell Town Centre at Croughwell in Galway; the Longford Shopping Centre at Longford; the M1 Retail Park at Drogheda in Louth; the Poppyfield Retail Park at Clonmel in Tipperary and the Arcadia Retail Park at Athlone in Westmeath.

“We’re seeing traditional Irish retailers taking advantage of the deals that are available”

Away from the Dublin market, Brennan says it’s discounters that are

leading the way. Originally this was apparent in the food market but now brands like 99p Store and Poundland are expanding aggressively. “We’re also seeing traditional Irish retailers like Pamela Scott taking

advantage of the deals that are available,” he says. One bellwether of the market is leasing progress at the Millfield Shopping Centre in Balbriggan, north of Dublin, which is one of very few new schemes to open this year. Millfield is anchored by one of the largest Tesco stores in Ireland, and it also features over 30 other retail units, plus a foodcourt with four restaurants, and getting on for half of these have been let to brands including Eason, Gamestop, Holland & Barrett, and Carphone Warehouse. Restaurants include O’Briens, BB’s Coffee & Muffins, and Graham O’Sullivan. Savills is joint letting agent with Jones Lang LaSalle and Brennan

says Bestseller has agreed to take several stores, and Boots has signed. Progress on Millfield could give confidence to other developers sitting on mothballed centres. For instance there are rumours of movement at the Ferrybank shopping centre in Waterford. But more concrete progress can be reported at Point Village in

Dublin’s docklands. The developer has now settled its legal dispute with anchor tenant Dunnes, although fitting-out has yet to commence on the store. Meanwhile a six-screen multiplex has been signed to beef up the leisure offer. But as for new development activity, CBRE’s latest retail bulletin

is blunt: “Unsurprisingly, there is virtually no new retail development coming on stream at present,” it observes. And as the slump grinds on inexorably, nobody’s taking bets on when that situation will change.

Find out more: For more information, please contact the author: August 2011 SHOPPING CENTRE

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