The following Irish Times article was posted by Cobalt on February 8th 2006 (no date given for date of publication):
Experts say special Grafton Street planning restrictions won't work
Planning&Development: Special planning restrictions aimed at reversing the spread of mobile phone shops and convenience stores along Grafton Street are likely to backfire, according to a number of landlords and property experts.
Two weeks ago Dublin City Council (DCC) proposed transforming the capital's main shopping thoroughfare into an architectural conservation area (ACA) following mounting concerns over the street's deteriorating character.
The new planning designation will give the local authority strict control over what types of businesses can trade from the street and it's expected that mobile phone shops, convenience stores and pharmacies will be among those retailers that are in future either limited or excluded from the prime shopping thoroughfare.
But property experts claim such interference in the market is counter-productive.
They argue that restricting certain retailers from acquiring leases simply "incentivises" the current undesirable occupiers to remain trading on the street and creates an unpredictable market dynamic.
The fear is that under the ACA, leasehold values on certain properties will shoot through the roof making it harder for new, more attractive retailers to gain a foothold on the thoroughfare.
For example, mobile phone companies pay top rents for their outlets but, if special planning restrictions limit their numbers, then their existing leaseholds become a scarce commodity. That means any retailer looking to buy-out the lease has to fork-out key money significantly above the going market rate. And, according to Stephen Murray, head of retail at Jones Lang LaSalle, "restricted" companies - like the mobile phone shops - could then be faced with "reverse premiums" if the leaseholds were impossible to sell at the adjusted value. In other words, the blacklisted retailer would have to pay another user to take over the terms of the lease if it wanted to exit the street.
Murray argues that since few companies would agree to such a transaction, given the stratospheric rental terms they currently trade under, the ACA would "ironically be preserving" Grafton Street's retail mix rather than enhancing it.
However, Dick Gleeson, head of planning at Dublin City Council, maintains the special planning restrictions will improve the area's appeal by offering easier access to certain retailers.
Over the past few years supply constraints on Grafton Street have blocked the arrival of international fashion houses and Gleeson claims the ACA will ensure new traders are of a "quality and standard" that is appropriate for Ireland's most famous shopping location.
If the scheme is adopted as an amendment to the city development plan by the end of the year, as Dublin City Council hopes it will be, landlords and tenants will no longer be able to award a lease to the highest bidder.
Instead the local authority will have the final say over what retailers can occupy Grafton Street.
A list of "difficult users" will be compiled, identifying retailers that are banned from the thoroughfare and specifying other users that are only allowed in limited numbers.
But, as property experts point out, Dublin City Council does not have a successful track record in controlling city centre retailing. Seven years ago the Ann Summers sex shop chain won its battle to open an outlet on O'Connell Street after it challenged the local authorities in the High Court.
Some property experts argue the Grafton Street ACA could precipitate similar legal disputes.
They also claim the mobile phone shops, convenience stores and pharmacies which have been at the centre of an increasingly bitter debate about Grafton Street's tarnished image would have been flushed out by the forces of the free market.
Hugh Linehan, head of property with Hibernian Investments, which owns six shops on the thoroughfare, insists the mobile phone outlets are temporary traders, more concerned with marketing than clocking up sales.
"It's difficult to imagine they can reconcile these high rents with the number of products they are selling. I think this is all about maintaining a high-profile image."
And he claims retailers, like the phone shops, will inevitably relocate as the demand for space increases from other users.
Yet it is this constant churn that has most incensed local politicians and lobby groups, such as the Dublin City Business Organisation. They blame the institutional funds, which own large chunks of property along Grafton Street, for mismanaging the area and undermining its appeal to the general public.
Over the past 12 months more than half a dozen shops have changed hands, most of them prompted by rent reviews where landlords have pushed for leases to increase to the latest Zone A benchmark.
It is the highest churn rate in 20 years and has almost culled the street of indigenous retailers.
However, Niall Gaffney, the investments director with IPUT, a property pension fund which owns five outlets on the thoroughfare, including the O2 Experience shop, insists Grafton Street's problems could be solved by developing the surrounding area.
"Henry Street really is stealing a march on Grafton Street at the moment because it has large-scale sites that can accommodate key tenants, like Arnotts and Roches Stores. So the most effective way to improve the retail mix on the southside is to offer more space and that means developing the large landbanks that surround Grafton Street.
"They're going some way to address this supply crunch with the South King Street and South Anne Street schemes but we need the local authorities to concentrate their efforts on encouraging more of these developments."
And he pointed out "you don't attract big name retailers by slapping down ACAs. How many have moved into O'Connell Street as a result of similar planning restrictions? Henry Street proves the only way to attract these companies is by providing high-quality, large-scale units."
© The Irish Times
What is remarkable is that in the meantime an additional mobile phone store has opened on Grafton Street. That means now there are two Vodafone Stores, two O2 Stores, a Carphone Warehouse, a Meteor Store and the new 3Store (just recently opened) on the street. It brings to 7 the number of mobile phone stores on the street alone. That's not counting the other mobile phone stores in the vacinity; O2 Store on Hibernian Way, O2 Store on Suffolk St / Nassau St, Carphone Warehouse in Stephen's Green Centre and an independent mobile phone store on South Anne Street that also recently opened, after
the suggestion of planning controls to tackle this very problem were raised initially. Effectively, since the idea was floated, two more phone stores have opened in the area between then and implementation.
It seems this "Special Planning Control Scheme" is arriving a bit too late for the party...
The whole area is becoming the mobile phone quarter - much the same way there is a "hammock quarter" in an episode of the Simpsons.