Wednesday 8 April 2009

“They were told to shag off* by both Irish and UK landlords.”

This perhaps give some indication of the gulf that currently exists between landlords and retail tenants in the UK and Ireland ref a more entrepreunerial approach to sharing the commercial risk in property usage by negotiating a combination of low rent and a % share of turnover, as per the US model.
Larry Brennan of Savills quoted landlord reaction in the Irish Times (8/04/09). He says companies formed to take over some of the UK multiples which had gone into administration had sought permission from the landlords to switch to a rent payment based on 3–7 per cent of the turnover.
A great many landlords have been approached to reduce rents and while some are apparently willing to consider it – rather than the prospect of a lengthy rent void – the institutions which own most of the buildings are generally unresponsive because of the likely knock-on effects on their pension funds i.e. the valuation of a property as an asset is put in the books at its rental value, therefore reductions in rental effectively reduces the value of the assets of the institution (i.e. bank!), something they don't need at the moment....
Hence the impact on us all (retailers, suppliers, consumers/tax payers), as the banking system is forced to join us in the real world...

* Old Irish expression often used interchangeably with "Go forth and multiply" to indicate a slight unwillingness to negotiate....

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