UK landlords to help retail tenants cut costs

Source : Business Times - 7 Apr 2009

The British Property Federation (BPF) said some of its landlord members had agreed a plan to help retailers cut costs and meet quarterly rent payments after complaints the existing system was causing cash-flow problems.

The BPF said a recent pilot scheme at four shopping centres had tested ways to find savings through measures such as deferring maintenance work and identifying changes to retailers’ service requirements.

The pilots, in which Next, New Look and Britain’s two largest real estate firms Land Securities and British Land participated, achieved projected savings of between 10 and 20 per cent, the BPF said.

The landlords have agreed to focus on 10 areas of expenditure such as waste management and security at their centres to help reduce retailer service charges and make it easier for them to meet rental payments on time.

News of the plan follows a period of intense lobbying from retail entrepreneurs such as Arcadia’s Philip Green, who claim the existing regime, which demands rental payments three months in advance, places unfair financial pressure on retailers in a tough economic climate.

A slowdown in consumer spending and a shortage of credit has driven several UK retail chains, including Woolworths and Zavvi out of business in recent months.