As the credit crunch feeds though into the High Street retailers are starting to ask their landlords to accept monthly rental payments rather than the traditional three months in advance.
Increasing numbers of the larger chains are asking their landlords to help them through the tough times as consumers respond to the worsening economic climate.
Clothing chains Ethel Austin and Internacionale and homewares retailer Au Naturale are the first to admit that they have asked for, and received a monthly deal. Many other chains and landlords are reluctant to own up to the practice because the retailers don’t want to admit they are feeling the pinch and the landlords want to avoid a flood of requests.
Landlords usually decline such requests in the first instance but if the tenant has a good track record, they will eventually agree because the value of a good, long-term tenant/landlord relationship is greater than the value of the lost interest from monthly rather than quarterly lump sums in the bank.
The willingness of landlords to accept such deals has been increased by the demise of several big names that have been forced into administration recently including Dolcis Footwear, Empire Stores and Sleep Depot Bedding.
In the last recession some of the smaller private landlords in Brighton accepted monthly payments and in the depths of the recession some even granted “personal concessions” reducing the rent payable although the headline rental figure remained unchanged.
Tough times have already started to feed thorough into empty shops or “voids” and IPD Data Services reports that nationally such void space is growing as a percentage of income from 5.9% last year to 6.5% in February 2008.
So far the void rate in Brighton & Hove remains unchanged at just under 5% (of individual shop units) and retail sales in the city have been subdued but not disastrous. But if the downturn deepens and consumers stay at home, the increasing difficultly of getting all forms of credit including overdraft facilities may feed through into empty shops later in the year, particularly in the independent sector.
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