Shop Talk

Retailers, consumers and prices

How do shopping centers spell rent relief? N-O.

April 24, 2009

AUSTRALIA-ECONOMY/SPENDINGIn an aggressive push to lower costs, many U.S. chain stores are asking their mall-owning landlords for a break on the rent. But they are rarely getting it – at least not from Developers Diversified Realty Trust,  which owns more than 700 shopping centers, typically anchored by big box and discount department stores.

The real estate investment trust reported better-than-expected quarterly results on Friday, and said it executed leases for nearly 2 million square feet in the latest quarter.

On a conference call with analysts, its president and chief operating officer, Daniel Hurwitz, said when it comes to rent reduction or deferrals, some retailers may be selling a bill of goods.

“There is a disconnect between tenants and landlords regarding the number of requests that are actually granted,” he said.

To date, Developers Diversified has received 672 requests for rent relief, rent abatement and rent referrals, with 78 percent of those requests coming from local tenants and the remainder from national tenants.

“Many retailers and their advisers will tell you they are successful in renegotiating the lease terms; however to date, we have granted only 20 rent relief requests, or less than 3% of the total requests received,” Hurwitz said. “The typical concession is for a period of one year and it is generally in the form of a deferred payment.”

Still, despite the anemic retail environment, Hurwitz said his leasing team had a strong quarter in terms of deal volume and square footage, indicating that retailers continue to look at growth opportunities but only if the rent is right.

Some of the most actively expanding chains include Bed Bath & Beyond and its various concepts, Best Buy, Forever 21, hhgreggJo-Ann Stores, Nordstrom Rack, and TJX Cos.

(Additional reporting by Ilaina Jonas)
(Photo: Reuters)

Comments

In the good old USA if you’re looking for sympathy you’ll find it in the dictionary between sh*t and syphillis.We’re a nation built on greed where our financial life is a zero sum game: If you’re gaining then I must be losing.We want it all now and we believe as Americans that we’re special and we deserve to have it all.There’s little sense of community or shared purpose among ourselves — let alone between us and the rest of the world.We are an overworked, underpleasured society looking for answers in materialism and upward mobility.The joke is on us.

Posted by Art | Report as abusive
 

There must be business opportunities for new enterprises in local markets where the incumbents are trapped in high lease costs, high debt repayments for expensive fit-outs, etc and cannot reduce prices.More people need value for money, leave the banksters to pig-on in the glitzy malls.

Posted by Survivor? | Report as abusive
 

He may be eating his words in about 6-months. The tenants will be in charge then. There will be several places for rent really really cheap.

Posted by Mark | Report as abusive
 

I believe the “Percentage Leases” where the tenant pays either a base amount plus a percentage of gross income or depending on which is higher, pays a base amount or a percentage of the business’s gross income should be applied in tough economic times like the current situation.ENOUGH GREED & SELFISHNESS

Posted by Ahmed | Report as abusive
 

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