Huge Shopping Centre Rents....

[gray123]

Hi,

I work in a regional shopping centre where the rent on shop units is massive.

Over the last year/ 18 months there have been 4 or 5 clothing shops which have opened up selling very average womens clothing around the £25 per item mark.

One of these shops in particular was operated by an asian guy who would work all the hours himself. He had a big unit and traded for around a year. After speaking to him a few times he said he was lucky to take more than £800 on a saturday.

One night, late after the shopping centre closed he told the centre manager he was having a large lorry coming to do a big stock changeover, but instead he did a runner. The unit is now to let. Rent £295K PA, Rates £136K PA plus a big service charge. Now there is no way he could have thought he would be able to sustain these costs? surely?

Alot of the units in the centre you could sign a lease for with the initial 6-12 months rent free. Is this some sort of scam they run? open up as a limited company and trade through the rent free period, then just as the rent kicks in, do a runner and shut down the ltd company?

Graham

 

[british steve]

What landords ask for and what landlords get are not always the same. Many shops are availbe to rent on short term licences or leases because even when the shop is empty the landlord still has to pay rates on it. I have a friend in London who's rent should be well over 300k per year - he pays less than 80K but can also be booted out on 12 weeks notice if a long term tenant turns up!

 

[gray123]

Wow they are oxford street prices! so he basically stays as long as he wants providing they do not find another tenant?

I guess though if the shopping centre does not take a rent deposit, and gives 9 month rent free, if done through a limited runner they can earn good money for 9 months then dissapear!

 

[british steve]

On short leases you still have to pay deposit and rent in advance! Landlords are not that stupid! We have a distribution unit near Bristol - rent should have been £47k per year - we pay just under half that on a 5 year lease

If you dont ask you dont get!

 

[BIGSPARK]

My friend from Portugal had a lisence with Ferrari to sell merchendise last year he approached westfield centre in west London they wanted 1200 Pounds per SQM for a 10SQM Kiosk plus rates that was the end of the conversation his now doing it in another country, he was to hire 5 people for the Kiosk so its a loss of 5 Jobs to the UK economy, I am all for economical advancement of property owners etc but some prices being asked are tantamount to GREED but that does not condone this Asian who clearly did something absolutly wrong and dishonest regardless of his economical standing he should have had the Balls to tell the landlord sorry but I cannot afford it anymore and I need our, but to be honest the prices he was being charged are crazy for a regional shopping centre but then so was the price my friend was being asked by westfield however I would love to compare the footfall between your regional centre and the Westfield in west London?

 

[british steve]

I live in Plymouth much of the time - we had a new (and pretty small and crap) shopping centre built a few years back - its not very big but still cost £300 million to build.

We run a number of wifi hotspot networks in shopping centres so I do have an idea of footfall and I also have a pretty good idea on returning customer numbers - I am very pleased I am not in retail!

 

[SourChocolate]

My friend from Portugal had a lisence with Ferrari to sell merchendise last year he approached westfield centre in west London they wanted 1200 Pounds per SQM for a 10SQM Kiosk plus rates that was the end of the conversation his now doing it in another country, he was to hire 5 people for the Kiosk so its a loss of 5 Jobs to the UK economy, I am all for economical advancement of property owners etc but some prices being asked are tantamount to GREED but that does not condone this Asian who clearly did something absolutly wrong and dishonest regardless of his economical standing he should have had the Balls to tell the landlord sorry but I cannot afford it anymore and I need our, but to be honest the prices he was being charged are crazy for a regional shopping centre but then so was the price my friend was being asked by westfield however I would love to compare the footfall between your regional centre and the Westfield in west London?

Is it a single sentence... ? :what:

 

[gray123]

I am referring to lakeside shopping centre which was the biggest in this area until stratford opened. Still a major shopping centre, 500,000 visitors p/w.

 

[BIGSPARK]

Is it a single sentence... ? :what:

No offence Sour Chocolate, when you can say you speak several Languages like I can do, can you correct my Grammar and Vocab, whats your issue? everyone else managed to understand what I wrote regardless ???

 

[BIGSPARK]

I am referring to lakeside shopping centre which was the biggest in this area until stratford opened. Still a major shopping centre, 500,000 visitors p/w.

Gray

I have been to Lakeside some time ago it is not a very bad little centre at all, I was starting to wonder about the size of the centre in Question because of the price but how big was the Area rented by the Asian tenant if you dont mind sharing this information?

I am in Leasing but not commercial or residential real estate but equipment and hardware that is industry specific my friend from Portugal is coming back to London soon and he wants to consider setting up again in London who knows, good luck in getting that rogue tenant though.

 

[arcon5]

To be honest, this situation may not even be anything sinister like you suggest.

On takings of £800 on the busiest day of the week he can't be making much money anyway - especially when you factor in the value of any deposit etc.

It is more than likely him knowing the rent free period is coming to an end, knowing his takings are well off those projected he did a runner with his stock so he can trade elsewhere and continue making a living.

 

[vvaannmmaann]

There was a time when lease contracts were subject to "upward only" rent reviews is this still the case?

 

[british steve]

We managed to get our rent fixed for the whole 5 years but they were looking for up only rent reviews, they also tried to hit us with full repairs etc which we also got out from and we pay our rent monthly in advance not every 3 months in advance. We also have a deal in place where we can buy our unit at a price that we have already agreed on. At the moment it is a buyers market, if landlords want to rent out units they now have to give a bit back!

Our unit was built over 2 years before we moved in to it, until then it had remained empty! Renters/Buyers market at the moment

 

[gray123]

The unit is 1600 sq ft but right in the middle of the mall, arguably the best location in the centre actually. I know the small 300 sq ft kiosk next door had a quoting rent of £75K+

 

[BIGSPARK]

Gray

I will tell my friend this, as he really wants to get on with it whilst he still has the Lisence from Ferrari to sell Merchendise etc, thanks for the heads up

 

[10032012]

The easiest negotiation factor would be to set-up abroad (a small office etc), create a website with some mock-up stores (alternatively trade there) and look for a place here with your UK business plan...

It seems to me there is a bigger desire for foreign or multi-national brands (of whatever size) than joe bloggs or A N Other company who reside in the UK... to landlords.

Seriously, you think there isn't any entrepreneurial spirit amongst people wanting to take over a retail unit in our half-closed high streets? Of course, there will be the typical issues affecting everyone even when the economy is looking good... like finance etc but whereas joe public sees a recession as all doom-and-gloom... there are thousands of entrepreneurs willing to capitalise on the advantage of lower rent and rates, and large stores who would have been impossible to compete with even with a very good USP having hit the wall.

I think a lot of landlords are stubborn (despite paying for rates etc. on empty units) willing to just sit on the land. Either hoping someone signs a 30 year lease or the area becomes such a $#!T hole that its prime to redevelopment (or homes) which will pay off nicely.