BPF: Don’t rush to blame landlords for retail woes’
Quarterly rent payments will be due today for commercial property tenants across the country, with some fearing that retailers risk being pushed over the brink as deflation begins to take hold and cash flow dries up. Retailers, led by Top Shop boss Sir
Quarterly rent payments will be due today for commercial property tenants across the country, with some fearing that retailers risk being pushed over the brink as deflation begins to take hold and cash flow dries up.
Retailers, led by Top Shop boss Sir Phillip Green and Carpetright owner Lord Harris, have accused landlords of pursuing archaic practices that are forcing retailers out of business.
However, property owners and investors, led by the British Property Federation (BPF) have sought to defuse the row by offering major concessions including changing leases to allow for monthly rent payments and reducing service charges, which pay for shared energy and facilities, like lifts.
It is not known whether Green or Harris rent property they own on monthly terms..
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John Richards, chief executive of Hammerson, who own Leicester's Highcross shopping centre and part of the Bullring in Birmingham, said:
"Landlords are generally open-minded in discussions with their tenants on matters of affordability and short term financial pressures. We're working extremely hard to understand the problems our tenants face on a unit-by-unit basis. We see no merit in having an adversarial relationship with them."
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BPF chief executive Liz Peace admits that the recession has damaged the image of the property industry, and stresses that maintaining close relationships with tenants will be important for landlords' efforts to turn this around.
"We need to remember that many large landlords are actually the pension funds and financial institutions that manage the savings of the man in the street. Their investors are not faceless moneymen but members of the public who have their pensions and savings tied up in shops or offices. Demanding massive concessions will not only hurt future development but hit the financial well-being of savers - the general public - who are already suffering from tiny interest rates on deposits.
"There is no easy answer when we're suffering the worst downturn for nearly a century and clearly there is scope for negotiation and for easing the burden. This is exactly what the leading landlords have been doing. But landlords are suffering just as much as retailers. Clearly the terms of leases - including quarterly payments - were agreed freely by both sides and you simply can't rip up thousands of contracts on the fly. But ultimately, common sense tells you that no landlord will want a bankrupt tenant and an empty building. They need rent like retailers need sales.