Help in store
Jan 8 2009 Jez Davison, Evening Gazette
TEESSIDE retail centres, which have seen a trend-busting surge in lettings matched by a universal increase in footfall over the crucial Christmas trading period, are moving towards flexible rental payments to help companies through the anticipated downturn.
Requests for monthly rather than upfront quarterly rents are becoming increasingly popular as tenants look to avoid the fate of Woolworths and others who are boxed in by falling sales and inflexible payment terms.
Colin Smith, operations manager at Wellington Square shopping centre in Stockton, said requests from retailers were being reviewed on an ongoing basis.
He said: “The landlord has been more flexible with his terms and conditions. Previously, there was a fixed (rental) charge depending on square footage. Now there are individual agreements for each tenant.”
Mike Clarke, manager of Teesside Shopping Park, owned by British Land, said there was a growing preference among his retailers to switch to monthly bills. He said British Land took each request “on its own merits”.
In the autumn national retailers - including high street king Sir Philip Green - claimed up-front quarterly rents were putting severe stress on retailers’ cashflow and urged landlords to accept monthly payments instead.
Although at the time Tees Valley retailers said rental payments were not a major issue, all the major shopping centres, including HillStreet and The Mall - both in Middlesbrough - said stores were now looking for more help from landlords.
Peter Drabble, manager of Hillstreet, said: “In the last three to six months we have seen more retailers asking for more flexible payment conditions and this trend will continue.”
Nevertheless, local shopping centres have witnessed a huge surge in lettings.
Middlesbrough’s Captain Cook Square and Teesside Park are fully let, while Wellington Square expects occupancy to reach 83% in the New Year after negotiating deals with FX Currency and O’Briens Sandwich Bar. Waremart is also due to open a 5,000 sq ft household goods store when seasonal operator Calendar Club vacates its unit later this month.
Festive footfall figures also gave grounds for optimism. For the week beginning December 22, footfall at Captain Cook was up 18.9% on the previous year, while 763,000 shoppers flocked to Wellington Square in the last month of 2008 - a whopping 24% rise on December 2007.
The Mall, where the former George unit remains empty more than nine months after brand owner Asda moved out, saw footfall rise by a more modest 1% for the two weeks from December 15, while shopper numbers at HillStreet rose by 6% over the year.
Nevertheless, Lynn Stainsby, centre manager for Captain Cook Square, said 2009 would be tough. “We may see people holding back on purchases, especially during the first three months of the year.”
