Rent crushes! - News about real estate, Kiev, Kyiv region. Real Estate In Ukraine
The increase in the rental rates in shopping centers on...Rent pressure on retailThe increase in the rental rates in shopping centers 20-40% leads many retailers to leave their homes. By the end of this year, several network companies will reconsider their plans for further expensive rental areas.The Ukrainian retail real estate market remains pronounced "seller's market", despite his active filling shopping malls (shopping centers). The owners of shopping centers and freestanding buildings continue to dictate to retailers the terms of cooperation. But the network company to reverse the situation, have resorted to drastic measures - refuse to rent space on unnecessarily, in their opinion, high prices and protect the interests of its business in courtWhy shops are closedSELA Corporation in the last few months closed in Kiev just two of their store on Khreshchatyk street and the Mall, "Town" on Petrovka. One of the main causes of failure of these trade areas in the Corporation called the increase in rents. Last year representatives of the Corporation complained of overly expensive rent in the centre of the capital, reaching about 30% of its turnover, compared to 12-15% in other countries. Apparently, after the recent increase in the cost of the "square" in 2008, SELA decided to stay in these areas is economically disadvantageous.Rising rents, raises serious questions about the effectiveness of its retail outlets and other retailers. Thus in the cost of some companies rental costs amount to 7 to 17%, while others reach 25-50%.According to the Director for development of JSC "ISS "Letter" (network Empik and the "Letter") Yuri Ghosh, the company plans to close a bookstore in Ivano-Frankivsk, despite the fact that the validity of the rental contract has not expired. "The owner of the place invited us to enter into a new contract with a rental rate higher than 25%. This price makes the store unprofitable," he said.According to the observations of retailers, when the management company or building owner gets a better offer he is making every effort to get the previous tenant to vacate square metres or work with him on new terms.Is currently assessing the feasibility of leasing company "Avanti records" (multimedia network of shops "hit the Market"). According to her co-owner Vladimir Konica, summarizing for September will show a picture of one of the shopping center on Petrovka". The discontent of the retailer is the fact that when the average level of rents in this shopping center is very weak customer traffic.Due to current growth in lease rates began to have doubts in the future, the presence of shops in several shopping center and the Director of marketing and strategic development "Brocard Ukraine" Igor Guta. "While none of the malls we went. Let's see how the situation will develop by the end of this year," he said. This year Brocard network in more than 50% of cases rejected proposals to lease new space in shopping centers in different regions of Ukraine.Director of stores development ProStor Vladimir Turkov said that currently there is a trend of increasing rents in the shopping centers: the request for the lease in the shopping center is approximately 50% higher than in a separate room. "We may revise the relationship with the developer, if the store located in the shopping center, makes a profit," he says. But he admits the retailer to increase customer traffic in the shopping center is very difficult.Now in many shopping centers is a commercial content areas. In the pursuit of profit the owners of the shopping center do not always take into account such factors as the stability of the tenants. Igor Gut sure that the company agreeing to pay huge rents often inadequately assess your resources and costs. "Many of them don't understand that at very high rents for their shops will not make a profit," he says. As a result, after two or three months, they receive the first losses and terminate the employment contracts. However, the constant rotation of tenants harmful primarily for the shopping center. According to Vladimir Turkova, when at the Mall too often change stores and presents them in brands, customer loyalty to him is reduced.Due to the global crisis in 2009, many retailers are preparing to tighten their belts. A year ago, some companies could afford to open a shop to work in test mode in some regions. In the near future the implementation of such projects is not expected. Now trading network easier to leave in some kind of Mall, if its developers do not make concessions for rental rates.The truth in court?About half of the retail network operators in the Ukrainian market, had to file lawsuits against the landlords. "We have repeatedly tried to prove his innocence in court. Sometimes they succeeded, sometimes not. It all depends on the quality of the contract", - says Yuri Ghosh.Sometimes the developer insists on early termination of the agreement, citing its decision numerous violations by tenant of the provisions of not only this document but also of the internal regulations of the shopping center. Controversial issues related to termination of contracts are settled in court. Going to court is advantageous for the tenant, as in this case he wins some extra time to work in the Mall (even if in the end the judgement is not in his favor). Throughout the trial, which has lasted at least six months, the landlord has no right to evict the unwanted tenant. According to article 777 of the Civil code, the lessee has a preferential right to a renewal of the lease. For example, the company Carlo Pazolini managed to win the court at the shopping center "Ukraine". The decision was made, oblige shopping and entertainment center to renew this tenant a new long-term contract.But the attempt "Sumatra Ltd. ("Cosmo") to prove their case to the new owner of the shopping center "Pyramid" with the help of Themis was unsuccessful.Litigation may adversely affect the reputation of the shopping center and scare away buyers, so the management of shopping centers is afraid to make information about them in public. Otherwise how else to explain the fact that all respondents "k:" representatives of the TC unanimously declined to comment on this topic.Not to bring the case to court, many online retailers had been proactive in trying to foresee all the risks before signing the contract - in the process of preliminary negotiations.The market shopping center waiting for redistributionAccording to the forecasts of retailers, next year will be a differentiation of the shopping center. "After two or three years, rents in shopping centers located in one region will be different in five or six times. The first precedent is already there," - said Igor Gut. Shopping centers tend to earn more, but their greed today has led to the fact that on the background of an increased number of sentences percentage of vacant space in unsuccessful projects around 20-30%. "Each of the megacities will be one or two successful shopping center in the Central part of the city and two or three successful shopping centers in the suburbs," predicts Igor Gut. In his opinion, with the market saturation of retail space, which will occur in the next two years, many owners will start coming out of unprofitable projects and to sell the shopping center.