Landlords agree plan to help retailers cut costs

The plan follows trials running since autumn 2008 to help reduce occupation costs for retailers struggling to cope with the impact of the recession.

A pilot project at four shopping centres looked at ways to drive savings through temporary initiatives, short-term deferral of maintenance projects and other operational costs, while driving longer-term savings through improved process and by mutually identifying changes to service requirements. The scheme has been extremely successful with projected savings achieved of between 10% and 20% in the initial four shopping centres.

Liz Peace, chief executive of the BPF, said: "This is evidence that a real difference can be made when landlords work together with their tenants. While the property industry has been as badly hit by the downturn as retailers, we are obviously keen to help our tenants survive and are prepared to work with them to improve efficiency, cut costs and do whatever we can to make sure that both sides of the business can get through these challenging times."

Others involved in the pilots include New Look executive chairman Phil Wrigley, Next property director Andrew Varley and British Land director of retail property management David Tudor-Morgan.

The plan builds on the lessons learnt from the pilot and from an open and constructive dialogue between the retailers and landlords that sprang from the collaborative working Group.

Last November, BPF president Francis Salway, who is chief executive of Land Securities, the UK’s biggest property firm, wrote to more than 500 property firms to encourage them to constrain service charges.

Richard Akers, Land Securities head of retail, said: "We all know the retail market is difficult and as major landlords it is a win-win situation if we can help to strengthen the position of our retailers.

"The Ten-Point Plan has been created so that it can be applied in almost any shopping centre to help identify potential savings. It is a checklist to assist landlords in evaluating current practice within their portfolios and even when no savings can be made it can provide a consistent framework on which to review costs."

Chris Harris, Arcadia Group’s property director, said: "A key ingredient to the success and output of this initiative has been the open and constructive dialogue and close collaboration between the participating landlords and retailers. It is hoped that other landlords can now be persuaded to adopt this philosophy."

Andrew Varley, Next property director, said: "What we are trying to do is get more transparency for retailers. Why do we need to pay 10% managing agents’ fees, for example? It is about drilling down to find out why certain costs are so high at certain centres. We would like every landlord to look at this."

LandSecs and British Land have already rolled out the cuts in service charges to the other centres in their portfolios.

Akers said: "We all know the retail market is difficult and, as major landlords, it is a win-win situation if we can help to strengthen the position of our retailers.

"The 10-point plan has been created so that it can be applied in almost any shopping centre to help identify potential savings.

"It is a checklist to assist landlords in evaluating current practice within their portfolios. Even when no savings can be made, it can provide a consistent framework on which to review costs."

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