More Town shops closing because of rising rents
Friday 14th August 2009, 2:01PM BST.
SOARING rents and declining tourism are forcing more Town shops to close.
Albany Jewellers and Natural Wave, both at South Esplanade, will shut their doors for the last time over the next few months.
A recent survey found 48 shops empty in St Peter Port – a figure set to rise as more tenants give up the struggle of coping with increasing property costs.
‘Our rent is sky high and the business is no longer viable,’ said Hazel Mauger, who has leased Natural Wave for six years.
Eight months ago, the annual rent rose by just under 40%.
She believes that the increase brought them into line with High Street rents.
‘It was a considerable jump,’ said Mrs Mauger. ‘We are just working to pay the rent at the moment.’
She said the landlord wanted short-term leases.
‘They must want to do something along this stretch,’ said Mrs Mauger, who will continue to run Rara Wraps from home and online.
‘It’s time to let the shop go,’ she said.
Albany Jewellers’ Royston James has rented retail property in Town for more than 50 years but will shut up shop at Christmas.
When they took over the shop 28 years ago, rent was £6,000 a year – now it has more than quadrupled.
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This is ridiculous, rents should be going down in this current market! already 48 shops empty and no rest up! I assume landlord’s are not dumb? An empty property in this market is completely valueless, surely landlord’s need to get a grip and offer realistic rents, there are always rent reviews to adjust the rental income to reflect the market at a later stage.
Or is that the tenant’s do not realise that they can challenge rent reviews? you (tenant’s) should all be doing this at the moment, you are in the driving seat with the bigger bargaining chips top play than a landlord who will be desperate to hold on to their tenant. it is clear new tenant’s are not queing up!
I sometimes wander if it is down to lazy commercial agents, not really doing their homework to estatblish a fair market rent. of course they want to keep their landlord client so to keep them happy do they say what the landlord wants to hear i.e your property is definately worth £33 per square foot? I hope not!
More action is required people! seek some expert advice and realise you can challenge these issues!
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people who own these shops are asking too much and because the tenant cannot pay huge rents the shop will be empty ,
im sure the landlord wants an income surely a smaller amount is better than nothing at all
landlords dont get gready you will pay for it every dog has his day
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Jonny
I think you will find that most leases are tied to personal guarantees. The businesses may close but the personal guarantors remain on the hook for the rent for the duration of the lease. The landlords couldn’t care less if the shops are empty as the rent is still being paid by the personal guarantor for the remainder of the lease.
You would have thought that the personal guarantor would then seek to sub-let the property to offset their own rental obligations, even at a loss so that they are not left with the full rent themselves, but the sub-tenancy has to be approved by the landlord who is not obliged to give consent.
If a sub-tenancy is agreed then the original tenant will wish to assign his obligations under the lease to the new tenant and then walk away, but this is difficult if the sub-tenant is paying less rent than the original tenant.
Many town premises have been empty for years as a result. Landlords only get interested in being commercial once the lease is about to expire and they are faced with no future rental income. In the meantime, an empty shop is perfectly fine with them.
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David,
Thanks for the info!
I should have clarified that if the shop and guarantor went backrupt, there would be little the landlord could do after the administrators have dished out the assets.
I still believe tenant’s are in a strong position to negotiate, if the lease comes to an end, or if the tenant can break the lease. tenant’s should be active in exploring their option to reduce the rent.
Negotiate leases for shorter periods, or ensure the terms have breaks in them. In the UK, landlords are giving away huge freebees on such scenarios just to ensure that the proeprty is filled (which ultimately looks good for their portfolio) I came across a deal the other day for a 3 year lease with 18 months rent free! Unheard of 18 months ago!
the other option, although I do not recommend this mind, is to sublet the property illegally, however would be pretty obvious in a small island, of whom everyone knows when a new or old shop opens/closes.
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Is it not possible that the landlords are collectively angling for bigger fish, i.e. UK High Street chains? I am disappointed on behalf of the poor tenant in this case as a 40% hike in rent is hardly justifiable and seems plain wrong. It is time that the States stepped in to try to protect independant, local businesses: many of whom account for the 48 presently vacant premises. Such protection should also be properly regulated.
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Basically, it’s down to the naked greed of the Landlords. It is as simple as that. Asking them to take a more pragmatic (and possibly less profit-obsessed stance) is like asking turkeys to cast their ballot in favour of Christmas. Depressingly, it won’t happen.
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Bring on Leales Yard development. At least the Co-op is committed to local traders. If Boots the Chemist redeploy to Leales Yard, there will be no need to go into town at all. It was greed that killed off the town market, and greedy people are doing the same to the town.
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Its a shame that St Peter Port is looking very sad
with such a large ammounts of vacant shop space.
If it was shop workers and trade unions causing all this pressing for large pay rises the politicans and media/press would be up in arms about it saying they are selfish and they are going to price themselves out of work.
But very little is ever said about the Greedy Landlords who excessively hike up the rents.
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A lot of these landlords will be funds and have already seen the value of the properties plummet by over 40% as this will be reflected in the unit prices, we are now seeing more and more property managers decreasing the rents as they have to be realistic, but its a hard pill to swallow. You are right that some of the properties are currently being paid for for guarantees but this does not apply to them all. It will sort it self out in then end but it will get worse before it gets better.
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I used to work for a fund management company who owed a number of properties on the hign street, when it was taken over by another company we had someone come out to value a couple of the properties, I explained they owned more properties than they thought they had bought in the deal, which is complete madness as they have no idea what assets they owned, this included residential property as well. Some of these financial companies are in such a mess that this is the least of their problems.
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Aren’t most of the deputies landlords themselves? Its not in their interests to do anything about greedy landlords. Even in a recession rents continue to rise, this applies to homes and shops. Landlords dont care as they are just greedy selfish people. If a property needs any building work done you will find that landlords are very good at cutting corners to reduce the cost which goes to prove that they dont care about the building, just how much they can get out of it. They are just greedy parasites who prey on other peoples difficulties.
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Ah, more anecdotal evidence about the financial ‘discipline’ on display in the private sector. Who suffers? The public. It’s lose/lose for us. At least if it were a public sector problem we could use a vote every now and then.
We must protect the wealth of a few private individuals at all costs. Soul? Sold.
To the bidder with the ‘right’ connections. Far from Guernsey being a proud island with strong individuals working as a team, work hard – play hard, it has become a dog to the corporations, directly or indirectly as these landlord anecdotes show.
Still, we’re not quite the US where you have to pay over the top insurance to stop you being scared of being becoming ill and having to sell your house after having an accident that was no fault of your own. But soon….
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Good job paid parking was knocked on the head because that would probably mean more than 48 shops empty.And staff finding jobs out of town ie Peacocks.
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Superb post Valeite.
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it will only get worse. the internet is taking over and has changed our style of shopping for good. nothing will bring back town. we will soon see charity shops all over town, just like the bridge. money talks and you still see people driving for miles to find the cheapest petrol.
i myself do all my shopping at the co-op and i dont see myself changing any time soon.
if i need anything else and i can wait then the old pc is booted up and away i shop. welcome to 2009.
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Yes, and we all know who are the greedy landlords who want to beleive there is no recession and that al shopkeepers should just work to keep them. What these idiots don’t realise is that some rent is better than no rent.
these shops are vital for the few tourists who come to spend their money. Gy has a reputation for small shops.
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