Retailers, Malls Spar Over Maintenance Charges
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