The number of retailers asking
for clemency on their rents has
risen sharply - a strong indicator
of gloomy high street economic
conditions.
Large chains such as Ethel Austin
and Internacionale and homewares
retailer Au Naturale are among the
first to admit they have asked landlords
to accept monthly rental payments
rather than the traditional
three months in advance.
Brighton and Hove Economic Partnership
fears this could just be the tip
of the iceberg.
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Executive director Tony Mernagh
said the number could be much
higher as many other chains and landlords
were reluctant to own up to the
requests because the retailers did not
want to admit they were struggling
and landlords wanted to avoid a flood
of requests.
Mr Mernagh said: "It's not often
that retailers admit to this because it
sends out the wrong signals for both
the landlord and the retailer. I think a
few more of the big players may have
come to a similar arrangement."
Mr Mernagh added that landlords
were now more likely to accept deals
on rents following the demise of
several big names that have been
forced into administration recently
including Dolcis Footwear, Empire
Stores and Sleep Depot Bedding.
Other troubled high street names
include Currys and PC World owner
DSG International - which issued its
second profits warning in three
months last week - and BHS, whose
owner Sir Philip Green recently told
the World Retail Conference in
Barcelona that the sector "was as
tough as I have seen it".
The general retail sector of the
FTSE has fallen 18.1% since the start
of the year.
Figures from Investment Property
Databank (IPD) Data Services show
that across the country, the number
of empty shops, known as "voids", is
growing as a percentage of income
from 5.9% last year to 6.5% in February.
So far in Brighton and Hove the
void rate remains at just under 5% but
Mr Mernagh fears that this could rise
if the economic downturn deepens
and consumers stay at home.
While large chains can often come
to an arrangement with their landlords,
independent retailers may not
have the same option.
Mr Mernagh said: "High street
names tend to have a large portfolio of
shopping centre sites so it is easy for
them to come to an arrangement with
a landlord because they are keen to
keep them.
"The independent sector is far more
vulnerable because they are undercapitalised
and do not have the cash
flow to see them through bad times."
However, the fact that many
independent retailers had private
landlords could offer some hope, Mr
Mernagh added, because they could
sometimes be more flexible than corporate
landlords.
He said that during the last recession
some of the city's private landlords
accepted monthly payments and
some even granted "personal concessions"
and actually reduced rents
even though the headline rental figure
remained unchanged.
Mr Mernagh said: "Often private
landlords can be more flexible than
corporate landlords. That is good for
businesses which have had a long
relationship with the landlord and
have always paid rent on time.
"To be honest, we are quite a way
off the point where shops have to ask
for reduced rents but I can see it coming
towards the end of the year if the
present economic downturn continues."
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