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US landlords claiming online sales as in-store revenue for rent calculation

Mark Fletcher
March 26th, 2021 · No Comments

The Wall Street Journal is reporting that some US landlords are demanding retailers report online sales as part of store revenue.

Retailers and Landlords Clash Over What Counts as a Sale
Rents based on percentage of sales leave room for interpretation as line between online and store sales blurs

Stores are reopening and customers are streaming back in, which means retailers that withheld rent during Covid-19 shutdowns are now able to pay. But first they have to agree with their landlords on how to define a sale.

Landlords are increasingly offering deals in which retailers pay a percentage of their monthly sales in rent, rather than a fixed amount. Percentage-rent leases give retailers breathing room when sales decline and allow landlords to reap the upside when sales recover.

But there is a sticking point. With e-commerce soaring, some landlords want to include a portion of online sales in the new leases, arguing that physical stores play an important role in many of these transactions. Retailers are pushing back, according to landlords, real-estate brokers and retail executives.

If this does happen it will only lead to more retailers exit9ing shopping malls. Malls are struggling as it is to attract retailers because shoppers are remaining sticky with high street retail they engaged with during lockdowns.

But, hey, we know what major shopping centre landlords are like. Yeah … awful. Look at Westfield, long into a lease they decide to charge a fee to access the post box located in a non public area of the centre that you have had free access to for years. And they wonder why retailers are exiting.

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Category: Ethics · Retail tenancy · Social responsibility

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