Rent ‘pain’ flexibility
TEES Valley landlords have responded to a ‘full year of pain’ for retailers, with more flexible payment terms, according to one leading firm of advisors.
Yesterday’s Lady Day - one of the four traditional quarter days on which commercial property rents fall due - coincided with bleak news from the CBI’s monthly distributive trades survey, which showed a worse than expected balance of 44% of retailers who said sales had fallen. The downward trend continued today with two major high street brands - Next and B&Q - announcing significant profit falls.
On Teesside, more landlords were willing to negotiate with retailers to help them over the crisis, said Jane Armitage, a partner with Mincoff Jacksons’ commercial property team in Stockton.
“Landlords like the cash flow and security of three months’ rent being paid in advance but at the moment any money you get is a bonus,” she said.
“An empty property doesn’t generate any income, but at the moment with the empty property rates legislation, landlords are not only not getting any income, but they are having to pay rates as well.
“We’ve fLound where we are granting new leases the landlord is - more often than they used to be - prepared for the rent to be paid monthly. And we have existing landlord clients who have agreed that their tenants can pay monthly.”
She said she was advising landlords to vary the terms of a lease by way of letter of concession, rather than a formal deed to protect their interests.
Many had been spooked by the number of larger retailers who had gone into administration around last quarter day in December, but when it came to negotiating lower rents, she said they remained cautious.
“You’re better leaving the rent as it was and allowing tenants to pay half so there’s a chance in the future to recover at least some of the money,” said Ms Armitage.
Meanwhile, news today from the high street was bleak.
Following publication of the CBI survey, Andy Clarke, chairman of the CBI distributive trades panel, said: “These poor sales figures for March complete a full year of pain for many retailers and it is disappointing that the less bleak results in February could not be sustained.
“With unemployment rising and household incomes struggling, the High Street faces some testing times ahead.
“The recession continues to force consumers to re-examine every item of spending.”
Retailers remained gloomy about the prospects for an upturn in April with a 42% balance predicting sales volumes would fall.
In a sign that firms are cutting their stock levels to match slumping demand, a balance of 15% of businesses said they had more than enough to meet expected requirements.
This was down from 19% in February and below the survey’s long run average for the first time since October.
Only grocers saw sales rise compared to a year ago, with a 7% balance reporting growth.
But this was sharply down from February, when a 60% balance said sales were up.
Today, Kingfisher - the world’s third largest home improvement business - said profits for the UK arm of B&Q fell 19% to £106 million after like-for-like sales declined 6.1% in the year to January 31.
High street clothing chain Next today also posted pre-tax profits of £428.8 million for the year to January 31, 14% below the previous year.
Next also expects sales at its directory and catalogue business - a key driver of profits in recent years - to be down by as much as 2% in the first half of this year.
Share
