THE CUT price fashion and homeware retailer TK Maxx is to open a major store in Newbridge only weeks after dropping plans for a similar outlet at the Ilac Centre in Dublin city centre.
An unusual feature of the New-bridge letting is that the American trader will be paying the landlord 5 per cent of its turnover rather than a standard rent.
The deal underlines the radical changes being sought by an increasing number of high profile multiples since the downturn in consumer spending took hold at the start of 2009. Though many provincial landlords are happy to settle for a percentage of turnover where big name traders are concerned, the owners of premises in prime Dublin locations still prefer a straightforward rental agreement or, at the very least, a significant base rent as well as a percentage of the turnover.
TK Maxx recently offered the owners of the Jervis Centre in Dublin a base rent of €1.2 million as well as 7 per cent of the turnover. But with several traders chasing the same premises, the owner Paddy McKillen opted for US fashion giant Forever 21 at a rent of €2.75 million per year.
Meanwhile, negotiations between TK Maxx and Dunnes Stores on taking over the Irish company’s former department store in the Ilac centre have apparently ended without agreement. Dunnes is trading out of part of the space as well as from a store fronting on to Henry Street.
TK Maxx has just taken a 20-year lease of the stand-alone store of 2,322sq m (25,000sq ft) close to the Whitewater shopping centre in Newbridge. There will a break option in year ten.
Projections from the company suggest that its turnover should range between €6 million and €8 million per annum. If either of those figures are reached, then the rent going to landlord Tom Treacy will be between €300,000 and €400,000 per annum. Penneys traded out of the same store on a temporary basis until it developed its own retail building along the main street. TK Maxx was one of four companies in contention for the store. Darragh Cronin of Savills advised the landlord on the deal. Colliers International Dublin acted for TK Maxx.
In Waterford, the same trader is considering relocating to the new Railway Square mixed use scheme near the city centre following a decision by An Bord Pleanála blocking the company from trading in Butlerstown Retail Park on the city’s outskirts. Another local developer objected to the type of goods being sold by TK Maxx. The company opened the shop about 20 months ago after securing planning permission from Waterford County Council.
The High Court has since ratified the ruling of the planning appeals board and is expected to set a date shortly for the closure of the store.
The owner of the park, Jim Tracey, has moved to seek a rezoning of the park under a review of the development plan due next year. TK Maxx is paying a rent of almost €500,000 for 2,415sq m (26,000sq ft) in three adjoining buildings which were amalgamated. The 20-year lease provides for a break after 10 years.