Are Commercial Rates in Dublin City preventing business start-ups ?

There is an estimated 20,200 premises in Dublin City Council’s administrative area.  In 2014, most of these have received increases in their commercial rates.  These increases will drive many hundreds of companies out of business and, in turn, place Dublin City Council’s finances into further deficit.

On 1st April 2014, Daft.ie hosted1,697 adverts for commercial premises.  All of these are currently empty and none pay business rates.  Just because a building or premises is empty doesn’t mean it doesn’t require police or fire services.  The street outside still needs cleaning and maintenance.  So, why are they exempt commercial rates?

These 1,697 premises represent 8.4% of the total number of commercial premises in Dublin City Council’s administrative area.  Assuming commercial rates range between €3,000 and €7,000 per premises, this means that DCC are missing out on between €4.9 and €11.5m p.a. from empty premises.

Why should a landlord be exempt from commercial rates if their property is empty?

City Centre Retail Office

Restaurant

Hotel / Bar

Industrial Unit # Units Others DAFT commercial premises
Dublin 1 81 116 4 12 213 5 218
Dublin 2 49 464 2 9 524 14 538
Dublin 7 15 35 0 12 62 4 66
Dublin 8 36 53 9 4 102 10 112
North City
Dublin 3 9 61 0 15 85 3 88
Dublin 5 7 8 1 16 32 2 34
Dublin 9 5 42 0 30 77 0 77
Dublin 11 22 43 2 60 127 2 129
South City
Dublin 4 6 87 0 3 96 2 98
Dublin 6 13 43 2 10 68 2 70
Dublin 10 9 15 1 52 77 3 80
Dublin 12 30 61 1 92 184 3 187
282 1028 22 315 1647 50 1,697
16.6% 60.6% 1.3% 18.6% 2.9% 8.4%
20,202

Being a student of commercial property in Dublin, I notice that many commercial premises have been empty for many years and the rents sought are not coming down.  If landlords can afford zero income from empty properties over a long period of time, they can afford to let them at lower prices.  It makes no commercial sense to allow an empty building deteriorate when they could have a tenant using and maintaining that building.

If DCC charged commercial rates on empty buildings, it would be a great incentive for the landlords to let them at lower prices than they are currently seeking.   Empty office space accounts for over 66% of commercial properties to let and these are difficult to let in recessionary times.

However, 16.6% of the properties offered are for retail units and these should be easier to let – if only the owners would lower their rediculous rents and service charges.  For the past FIVE years, retail units in the prestigious St Stephen’s Green Shopping Centre, the Royal Hibernian Way and the Westbury Mall have been vacant.  These vacant units make these locations appear unsuccessful and this negative image afftects the other traders around them.

Why not let new retail talent in?

If Dublin City Council charged full commercial rates on empty premises, and double rates on retail units empty for over a year, these lazy landlords would have an incentive to let their wasted assets – surely some rent is better than no rent?  If they gave a tenant free rent, the’d gain from the tenant paying rates and maintaining the premises.

The current practice of playing ‘musical estate agents’ has to stop.

We have to many fast food restaurants and sandwich bars in Dublin’s city centre.

Unless landlords are incentivised by Dublin City Council, the urban blight will increase.

Rather than driving struggling traders out of business via increasing commercial rates, DCC should be pressing lazy landlords to fill their empty premises with new tenants – who will be happy to pat commercial rates, if they can get a better deal on rent.

 

 

 

 

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