Re­tail­ers, Malls Spar Over Main­te­nance Charges

The Economic Times - - Brands & Companies - Ra­sul.Bailay @times­group.com

New Delhi: Mall op­er­a­tors and many of their ten­ants are at log­ger­heads over a main­te­nance charge over and above the ba­sic rent, with re­tail­ers al­leg­ing that malls fix this rate in an am­bigu­ous man­ner and raise it with­out proper ex­pla­na­tion.

Re­tail­ers As­so­ci­a­tion of In­dia (RAI), a na­tion­wide in­dus­try body of re­tail­ers, has now stepped in to ini­ti­ate a process to help make a stan­dard for de­ter­min­ing com­mon area main­te­nance (CAM) charges.

“CAM keeps chang­ing for­ever and it is pa­thetic,” said the chief ex­ec­u­tive of a for­eign ap­parel group that op­er­ate mul­ti­ple brands across In­dia. While some malls charge CAM of .₹ 40 per square feet on su­per area, some charge .₹ 22 per sqft, said the per­son who re­quested not to be iden­ti­fied. “So ev­ery malls has its own CAM cal­cu­la­tion and it is not trans­par­ent.”

Re­tail­ers say some malls even put half or full ex­pense of mar­ket­ing ef­forts to pro­mote the malls into CAM cal­cu­la­tions. “CAM is not nor­mally de­fined and also there is no limit on the ex­pense,” said Ku­mar Ra­jagopalan, chief ex­ec­u­tive of RAI. “So many of them (mall op­er­a­tors) put all the ex­penses of run­ning the mall, in­clud­ing their ad­min­is­tra­tive per­son­nel, into CAM,” he said. A Mum­bai-based mall de­vel­oper said sev­eral malls have of­fered sub­sidised CAM rates for their an­chor ten­ants at the cost of other re­tail­ers. “For ex­am­ple, an an­chor would be pay­ing x amount (as CAM) while some smaller ones would be pay­ing 2x. That is not fair and why would a kiosk sub­sidise for an an­chor?” said the per­son.

Phoenix Mills, which op­er­ates pop­u­lar malls in Mum­bai and Pune, said it fol­lows a “trans­par­ent way” to fix CAM charges and share ev­ery­thing with the ten­ants.

Ra­jen­dra Kalkar, pres­i­dent, west, at Phoenix Mills, wel­comed the move to stan­dard­ise CAM rates. “We are al­ready fol­low­ing stan­dard norms. If they come up with some­thing new, we will be happy to co­op­er­ate and work with them,” he said.

Re­tail­ers As­so­ci­a­tion of In­dia has now stepped in to ini­ti­ate a process to help make a stan­dard for de­ter­min­ing com­mon area main­te­nance charges

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