Retailers seek lower rents from landlords

Click to follow
The Independent Online
MORE than 20 of Britain's top retailers yesterday joined forces to do battle against excessive rent demands by landlords, writes Heather Connon.

At a meeting in London's RAC Club arranged by Sir Desmond Pilcher, group chief executive of Littlewoods, stores groups such as Marks & Spencer, Boots, Dixons and John Lewis resolved to lobby the Government, property companies and the Royal Institute of Chartered Surveyors, demanding a change in the current lease system, which only permits rents to be reviewed upwards.

The retailers will try to persuade the landlords to adopt a more realistic approach to rent levels because of the recession, which has been hitting retail profits for more than three years.

At issue is whether there should be a change in future leases - such as a move to the US system of basing rent on turnover - and whether landlords should be forced to make adjustments to existing contracts. Under the current system tenants are locked into 25-year leases with rent reviews at five-yearly intervals.

In the boom years of 1987 and 1988 rent levels rose dramatically, and these have now become the base level against which current reviews are being assessed.

The depression in the property market means that landlords have had to accept low rent levels and give incentives to attract tenants. That has left many retailers paying rents on older space far above what they would pay for new.

John Parry, managing director of Hammerson, said the most recent reviews by the group had been at Brent Cross, its shopping centre in north London, where three-quarters of the reviews had been agreed and negotiations on the remainder were proceeding.

He had some sympathy with retailers having a hard time, but said: 'We are all having a hard time', and pointed out that the contracts were entered into freely.

Comments