Landlords reject one-third of retailer requests for rent reduction
A recent survey conducted shows that many tenants are having difficulty negotiating a lower rent with their landlords. As a result, many may have to close their doors.
Print15 June 2010
Retail Excellence Ireland conducted a survey with its members, which revealed that of the 97% of retail respondents who have approached their landlord for a rent reduction, more than 30% have received an outright rejection. If rent reductions are not granted, 25% claimed they would be forced out of business in the next 12 months. On foot of these findings – compiled from feedback from 187 member companies, and representing approximately 2,200 individual retail stores – REI members have instituted a campaign directed at public representatives to bring about the abolition of retrospective rent review clauses.
The publishing of these findings coincides with the final meeting of the Working Group on Rent Reviews, established by Minister for Justice & Law Reform, Dermot Ahern last March.
So far this year there have been 78 insolvencies in the retail sector, the third highest after construction and services. Chief executive of REI, David Fitzsimons said that more retailers will be forced to close their doors to business if landlords continue to refuse to budge on rent.
“There have already been a significant number of retail closures this year, mainly because landlords are either refusing to consider reduced rental terms or refusing to engage on the matter of rent full stop,” said Fitzsimmons.
However he said that it was important to acknowledge that some landlords have been forthcoming with reductions but many professional and institutional landlords, particularly in shopping centre locations, are refusing to budge. “While retailers appreciate the difficult situation landlords themselves may be in, it is our view that an occupied premise is better for all involved,” he said.
Coordinated by REI, retail members have begun a ‘rent’ campaign targeted primarily at public representatives, but also at landlords, seeking their intervention on the issue. Retail operators have begun sending out thousands of postcards to their local politicians, featuring shock imagery of Grafton Street boarded up, and asking them to call on the Minister for Justice to abolish retrospective rent review clauses. REI has also created three rent movies for online circulation as part of the viral component of the campaign.
“The objective of our rent campaign is to keep this issue top of mind for this country’s decision makers and let them know that high commercial rent equates to business failure and job losses. For months now we have been appealing to the Government to abolish upward only rent reviews retrospectively. We appreciate that the Minister for Justice has implemented some very fundamental policy changes in respect of rent, however, as our survey results indicate, much more needs to be done if we are to arrest this worrying situation,” Fitzsimons said.
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