Tanancy crisis for retailers

Written on the 12 May 2009

 

THE Australian Retailers Association (ARA) has identified a tenancy crisis and is urging the Federal Government to take action on the Productivity Commission’s (PC) Market for Retail Tenancy Leases final report in August 2008.
ARA executive director Richard Evans aims to alleviate spiralling occupancy costs caused by the global financial crisis.
“There has been no action on the issue of retail leasing since the well overdue recommendations from the PC over eight months ago, including a nationally-consistent retail leasing legislation and the introduction of a voluntary code to curb robust behaviour,” says Evans.
“Retailers - who have been struggling with low consumer confidence and increasing costs for over 12 months - are still waiting for the Rudd Government to take action on unfair and restrictive retail leasing legislation.”
Evans says occupancy costs totalling more than 15 per cent of retail turnover are simply not sustainable, compounded by low consumer confidence and falling retail sales.
“Retailers are hurting and while landlords are trying to assist some individual tenants the larger issue of lease renegotiation still remains. The Government must step in and take long overdue action to help retailers reduce spiralling occupancy costs in tough economic times,” he says.
“Governments have been told for many years that shopping centres operate in a virtual monopoly due to planning laws and have restrictive competition practices within their negotiations with retail tenants. As yet no federal government has had the courage to resolve this issue.”
The ARA says retail tenants are disadvantaged at the negotiation table due to one-sided disclosure requirements.
It recommends:
- Separating legislation for major shopping centres from suburban high street retail outlets.
- Simplifying retail leasing legislation nationally through harmonisation of state laws.
- Applying a code of conduct to the sector administrated by the ACCC.
- Disclosure of turnover figures to independent third party to be reported at category level.
“The Rudd Government, with its policy of reducing the cost burden of differing state legislations, must take immediate action on retail leasing,” says Evans.

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