Retailers, malls battle over rent relief

Big brand retailers have been accused of wielding their clout to get rent relief from their mall landlords, despite healthy trading since lockdown.

But other smaller retailers say they are genuinely in need and retail landlords have panned a Government move to resolve the situation.

Yesterday the Government, which has urged commercial landlords to be flexible with their tenants, announced it would bring in a new arbitration scheme for parties who can’t agree.

A temporary clause will also be inserted in leases requiring a fair reduction in rent where a business has suffered a loss of revenue because of Covid-19.

Many landlords have already offered rent relief during April and early May when shops were closed and then restricted. But some malls and some tenants have been playing hardball. Australian furniture and appliance chain Harvey Norman initially refused to pay rent while its New Zealand stores were closed, later agreeing to pay half in order to kickstart talks with its landlords.

Oyster Property Group, which manages the mall for Australian owner Lendlease, has said it was dealing with each request at Meridian individually.

Many in the property industry have been hoping New Zealand would emulate Australia’s mandatory code of conduct, which requires landlord and tenant to negotiate a rent reduction, and that at least half of the reduction must be a rental waiver.

But Susan Hagan, manager of Tawa’s Outlet City, says the Government’s arbitration move could manager of Tawa’s Outlet City

end up like the Tenancy Tribunal with delays and costs. And when it came to rent relief, Hagan said landlords could get bullied by retailers too.

Tenants at her mall had been offered half to full rent relief over April and heavy discounts in May, as the managers went through each shop’s business figures. But some big brands were demanding rent relief up until August or September or they would not renew their leases.

And while April had been a write-off, retailers had benefited from strong trading just before and after lockdown.

‘‘In the weekends it’s like Boxing Day,’’ Hagan said.

Campbell Barbour, chairman of the NZ Council of Retail Property, said it ‘‘would be fair to say all sorts of things are happening’’. But at the end of the day, a contract legally required tenants to pay their rent, unless a variation was agreed.

‘‘In the weekends it’s like Boxing Day.’’ Susan Hagan