News Articles

Landlord code of conduct to break retail code of silence

The Australian Retailers Association (ARA) has called on the Rudd Government to bring retailers and landlords together at a Retail Tenancy Crisis roundtable to help restore the balance in leasing negotiation and break the retail code of silence.

ARA's Executive Director Richard Evans said the ARA had called on Federal Ministers Craig Emerson and Chris Bowen to step in and facilitate an environment where retailers, who often remain tight lipped about unviable leasing conditions, are provided a platform to voice their concerns.

"Many retailers, particularly smaller retailers, subscribe to an unwritten law to remain silent about spiralling occupancy costs and unfair leasing conditions out of fear they will be penalised by self-serving landlords who can refuse to renew their lease," Evans said.

"The proposed Retail Tenancy Crisis roundtable would allow landlords and retailers to come together and work through long outstanding issues from Productivity Commission's (PC) Market for Retail Tenancy Leases final report (August 2008).

"With almost 40 percent of retailers paying occupancy costs greater than 15 percent of their turnover*, which is never sustainable for a small business, one of the issues retailers would bring to the table is a code of conduct for major shopping centres to help curb robust behaviour from landlords.

"The idea of a national register detailing all commercial lease terms (including inducements) is also supported by over 80 percent of retailers* and would help restore some balance to the negotiation table," Evans said.

General Manager (Property) of national franchise retailer Bakers Delight, Gerry Gerrard, agreed a code of conduct for major shopping centres would be beneficial and a national register detailing commercial lease terms would arm retailers with vital facts required for fair lease negotiation.

"It is vital for retailers to stand their ground when negotiating lease terms and conditions but this requires a lot of quality data-gathering including comparable rents of other tenants in the vicinity, traffic data, sales growth and talking to other retailers.

"Under current leasing laws retailers can be forced to relocate, issue notices of decline for lease renewals and they can be prevented from having any options on a lease term. The single biggest challenge is ensuring rental costs reflect current trading conditions and a target (of rent as a percentage of turnover) must be set for lease withdrawal," Gerrard said.

Evans continued, "The Retail Tenancy Crisis roundtable is the first step in breaking the code of silence and allowing retailers, who are struggling with spiralling occupancy costs, to put their concerns on the table. We look forward to hearing from the Government on this issue."

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.5 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

Options:

View Archives