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Power struggle on rent

Power struggle on rent
Herald Sun, Melbourne  by  Jane Harper

08 Jun 2012 Business News - page 69 - 287 words

RETAIL lobbyists are demanding greater transparency in shopping centre rent agreements, calling for an end to the "smoke and mirrors" surrounding negotiations.

The Australian Retailers Association said a level playing field could be created with some simple changes to the method used to calculate rents.

The setting of rents has become an increasingly thorny topic, with major retailers including Myer, Just Jeans owner Premier Investments, and Katies owner the Specialty Fashion Group all closing marginal stores in recent months, where they say landlords have failed to enter into meaningful negotiations.

ARA executive director Russell Zimmerman said the current regulations required retailers to disclose their turnover to landlords.

Instead, he proposed a change which would see retailers report to a third party, which would in turn report turnover to landlords by retail category rather than by individual store.

"This would encourage landlords to set rents at market value like they are supposed to, not by what individual retailers can afford," Mr Zimmerman said.

The ARA also called for market value to be determined by an independent valuer.

Mr Zimmerman said the association was talking to state governments about setting up national registers to publicly record rents charged to retailers.

New South Wales and Queensland already have registers, but Mr Zimmerman said the scheme should be expanded nationally. "Knowledge is power, and at the moment the landlords have all the knowledge," he said.

Franchise Council of Australia chairman Stephen Giles said retail tenancy was a federal issue and agreed the debate highlighted the need for a leasing code of conduct to increase transparency.

"Retailers are calling for a removal of the smoke and mirrors associated with negotiating fair and sustainable leasing arrangements, through reforms that balance the scales and ensure transparency," Mr Zimmerman said.

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