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How the government’s inaction on retail tenancy in this COVID-19 world is problematic for small business retailers

Mark Fletcher
March 30th, 2020 · 6 Comments

The Prime Minister late yesterday asked business owners and landlords to sit down and work with each other to find a solution to the retail tenancy challenge presented by the restrictions imposed in government responses to COVID-19.

Based on my work with retailers in many situations, city, country, high street and mall, the approach of sitting with landlords will not work for most.

While some individual landlords have already delivered practical help with rent holidays and rent discounts, too many have not. In the shopping mall situation, I am not aware of any of the major landlords like Westfield offering any financial support. Indeed, in my now experience with Westfield, their approach has been quite threatening – don’t close, pay your rent on time.

At the independent landlord point, I have seen discounts as high 75% for six months put in place, April / May rent free in a couple of situations. The most common discount I have seen is 50% off for April with a commitment to reassess.

My experience is that independent landlords are more likely to act sooner and at a more valuable level.

This is where the Prime Minister’s announced approach is problematic as it relies on too much work to be done, too many conversations to be had. Big landlords like Westfield operate in silos, they treat each tenant differently with independent small business retailers usually be treated worse than big retailers.

What we need is national consistency. We need this urgently. We need the federal government to set a position, urgently, that all – retailers and landlords – can rem;y on as a single national position. Without this. the weak will carry the higher per square meter cost, as is the case today.

I urge the Prime Minister and others in authority to resolve this nationally for the benefit of the mental and financial health of small business retailers.

We have been hearing about something coming for two weeks. With each day that passes with no decision, the perspective and health of those so desperately waiting deteriorates and this is problematic for their businesses and those who rely own their businesses.

We can’t trust the Westfields of the world to fix this. They have no track record in this regard. This is something the federal government needs to address, and urgently.

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Category: retail · retail leases · Social responsibility

6 responses so far ↓

  • 1 Steve // Mar 30, 2020 at 2:22 PM

    Problematic for both small business and landlord alike. I have just received a request for some sort of rental reduction from a legal firm tenant. My property manager advises that she has been swamped by such requests today. In the case of complete shutdown most common response is nil rent for next 2-3 months. For other essential service stores still open but suffering from downturn the requests seem to be around 50 per cent relief. Agree we need some clear response from government soon who continue to promise it is coming. I suspect Westfield will prompt this sooner rather than later. Personally I feel embarrassed to request relief whilst the cafe and clothing retailer on either side of our store bleed.

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  • 2 Graeme Day // Mar 30, 2020 at 3:02 PM

    There has been a six month freeze on evictions ordered by the Prime Minister on Sunday night.
    He has urged Shopping Centre Management to meet with retailers andd discuss their plight and to come to some arrangement. One newsagent whom I know well did so and got lease adjustment to 10%of turnover until Lockdown is declared over, then they will discuss new terms for the next stage etc.The turnover is product sales plus commissions as is usual.
    I hope this may help some as the terms may not suit all I like it because it is a constant if turnover goes down (more than likely) so does the rent.

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  • 3 Mark Fletcher // Mar 30, 2020 at 3:46 PM

    I’ve been involved directly in 15 negotiations over the last 2 weeks. All but 3 have resulted in reductions ranging from 50% to 100%. The 3 will resolve once the government acts, because of landlord funding arrangements.

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  • 4 Graeme Day // Mar 30, 2020 at 4:53 PM

    Mark, This is good, keep it up. Your results do seem to contradict your article in that the sitting down wih Landlords will not work, when you have published here an 80% success rate.
    I realise Westfield are different and have had this experience with them and they were to be avoided at all cost but then again all were difficult so your results are excellent especially given they were negotiated before the P.M.’s speech.

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  • 5 Eddy // Mar 31, 2020 at 7:50 PM

    Mark your mate Solomon said he’s not paying so it’s on for everyone in a Westfield to do the same

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  • 6 Mark Fletcher // Apr 1, 2020 at 7:11 AM

    Graeme, sitting down with major landlords has not worked yet for any of the many retailers I have spoken with.

    Eddy, Solomon Lew is not my mate, I’ve never met or spoken with him.

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