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News Release

Dublin

Boots Poised for Targeted Irish Expansion

Potential for an additional 25 store openings over the next three years


Dublin - 18th November 2011 – David McKenna, formerly Head of Property for the Carphone Warehouse in Ireland has been appointed as Estates Manager for Boots. His role is to drive the store expansion in Ireland, whilst at the same time undertaking a fundamental review of the property cost base.
 
Boots opened their first store in the Republic of Ireland in 1996 and have expanded since through a combination of company acquisitions and organic expansion.  The company currently have a total of 67 branches throughout the country having signed just over 15% of these in the last year.
 
Coinciding with this new approach, Jones Lang LaSalle’s Dublin office have been appointed as sole agents to advise Boots on all property matters for their Irish business.  
Stephen Murray Retail Director of Jones Lang LaSalle confirms “We are delighted to have been appointed by Boots to rigorously review the existing portfolio of properties and benchmark each of these to market rent to ensure the cost base is appropriate. Due to the extremely difficult retail letting market we are also optimistic about our ability to deliver 25 new outlets over the next three years”. 
 
In parallel with this review of costs Boots have announced an active, though selective expansion plan. David McKenna confirms that on appropriate market rental terms the company see potential for an additional 25 store openings over the next three years.  Boots are undoubtedly the most active occupier in terms of expansion in the Pharmacy sector in particular and probably also in the wider retail market in general. This pro-active approach presents a very positive news story with the potential for new job generation through the potential new stores of in excess of up to 400 people from 2011 through to 2014. 
 
Boots has already opened 9 stores in 2011 so far with a further 5 scheduled to open before year end delivering an impressive  total  of 150 new jobs in that period.   The retailers store requirements range from neighbourhood type opportunities of the order of 3,000 sq. ft. up to flagship stores for a Dublin city centre flagship store of the order of 20,000 sq. ft. 
 
A notable change in the market has been that many opportunities are not only at lower rental levels but also often  have to be presented by Landlords on far more flexible arrangements. Frequently a combination of turnover only rents or base and turnover transactions are being concluded.  In these uncertain times the assurance of a letting to a recognised brand such as Boots represents a significant and valuable advantage.
 
McKenna confirms that “notwithstanding the allegations often made about slow decisions from NAMA their experience to date has actually been quite positive with about seven of this year’s store openings in locations where the lettings have been subject to NAMA’s ultimate direction”. 
  
Stephen Murray and Lisa McGrane in Jones Lang LaSalle confirm that the over 30 or so possible  target locations include Dublin City Centre, Stillorgan, Blackrock, Lucan, Malahide, Carlow, Tullamore, Galway, Ballinasloe, Enniscorthy, Arklow, Shannon, Dungarvan, Nenagh, Greystones, Wicklow, Trim, Tipperary, Roscrea, Cobh, Mallow, Bandon, Fermoy and Skibbereen amongst others. Following Jones Lang LaSalle’s recent appointment it is not surprising that already over a dozen possibilities meeting the companies criteria (many not yet openly on the market) have already been presented. 
 
Understandably Boots have made it clear that further expansion plans and the rate for delivery of new stores and jobs assumes and will be assisted by reductions in rent secured on existing stores. A central plank of the expansion programme is keeping the business cost base at a manageable level in the short to medium term. Jones Lang LaSalle advise that this is already being recognised as mutually beneficial to landlords, not only in  the years leading up to expiry on older leases or where additional adjacent expansion space is being offered , but also where Boots represent a key occupier in centres that may be struggling. It is a fact that a small percentage of stores in partially vacant schemes or underperforming locations may lose less money through closing whilst at the same time selected new viable stores open.
 
The plan anticipates up to 9 new shops where landlords are already competing strongly to get on the Boots 2012 list. With little market activity /extended rent free periods and capital contributions becoming the norm for most retail locations,  it is expected that many more landlords will present keen terms  to get their premises occupied in 2012 rather than deferred to the  possible 2013/2014 Boots opening lists.