Tuesday, 28 April 2009

Landlords work with retailers to save costs

Fashionista can report that six prominent landlords led by Land Securities and more than 25 retailers led by TopShop have devised a "10 point plan" to reduce service charges at shopping centres and retail parks across the UK. The plan as reported by Property Week is based on a trial service charge reduction which ran last autumn in four major shopping centres. The results revealed cost cuttings of up to 20 %. Andrew Varley, Next's property director, supports the initiative and has emphasised the importance of transparency for retailers and asked for landlords to assess why certain costs are so high.

Acting as a checklist for landlords, the "10 point plan" provides a framework on which to review costs and helps evaluate current practice. The retail entrepreneurs involved are also seeking to ensure insurance charges are more transparent. The "10 point plan" focuses on the following cost-efficiency issues:

1. Engagement with retailers
2. Hours of operation
3. Cleaning and environment
4. Waste management
5. Security
6. Administration, procurement and purchasing of services
7. Plant and fabric maintenance
8. Utilities and energy management
9. Customer service
10. Marketing

Fashionista would hope that landlords will be encouraged to shop around for competitive insurance quotes and where reductions for bulk purchases on insurance or any service charge costs are given that these savings are passed on to retailers.

N.B. A further example of landlords and retailers working together to get through the current recession is illustrated by JJB Sport's recent CVA deal, back by its landlords as reported in Drapers. Under the agreed deal, JJB's major landlords Hammerson, Land Securities and British Land will be paid out of a pot of £10million, set aside by JJB Sports, as part of arrangements to end the 140 leases early and move to monthly rental payments in respect of the remaining 250 leases.