Page 339 - Week 02 - Tuesday, 20 February 1990
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just a touch uneven, and it is particularly so in large centres in which a number of major tenants are complemented by a mix of smaller operators and chains. Unfortunately, I was unable to convince my colleagues of the need to comment further on the problem of the smaller operators in the centres regarding their bargaining position. While I acknowledge that both groups depend on each other to a certain extent and that one would not be able to operate without the other, the problem is really one of supply and demand.
Major prospective tenants for a shopping centre, and specialist tenants such as banks and building societies, are sought after by the centre management with incentives to establish the initial attraction to shoppers. However, without some smaller retailers to balance this favoured sector, the centre would become dull and boring, and customers would soon take their custom elsewhere.
Unfortunately for the small tenant, there are many budding business people just itching to spend their hard-earned superannuation money on finally becoming their own boss, and the centre management really has only to sort out the wheat from the chaff to fill these spaces. This means that, while they are needed by the centre management, the smaller tenants are more numerous and the management can afford to be a bit more choosy and does not need to provide incentives by way of special rent packages. Often the smaller tenant ends up subsidising the conditions or incentives given by the centre management to the institutional tenant. For example, major tenants do not pay the legal fees of the landlord while this responsibility becomes a very expensive part of the overheads for the smaller tenant on a basis of "Take it or leave it; there are plenty more where you came from".
It is this difference in supply and demand between the two types of tenants in shopping centres that also leads to other problems as owners seek to change their centre by making it difficult for an old tenant to renew a lease, by increasing the rent to an uneconomical figure for the tenant or by insisting on a forced relocation or refurbishment or a new shop front. This is a clear case of the rules of supply and demand being used to aid a redevelopment with some of the smaller tenants falling by the wayside.
While one will argue that the landlord or building owner has a right to run his or her centre as he or she sees fit, some of the methods used show clearly how unequal the situation often is. While acknowledging these factors, the report does not in my opinion place sufficient importance on the development of unfair or unbalanced landlord-tenant relationships. That often occurs in the circumstances that I have already outlined. One could almost argue that the majority of problems have arisen because of this attitude on the part of some landlords that they are doing the tenants a favour by allowing them to set up a shop or business.
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