Property Reporter

SMALL retailers' battle with shopping mall landlords for fairer treatment seems to be paying off.

Jaco Odendaal, co-developer of the R800m Capegate retail and residential mixed-use precinct on the N1 at Brackenfell, says shopping centres' landlords have woken up to the plight of small tenants and are starting to treat them more fairly.

He says this follows more than a year of tenant activism that has put the spotlight on unfair leases, harsh treatment and a lack of security that allows successful tenants to stay on when their leases are up.

Odendaal says he is introducing a new deal for small retailers that will give them certainty their leases will be renewed.

He says this will add goodwill to their businesses, making them more viable and more bankable. It will also encourage tenants to invest more on interior design and shopfitting .

"We can't change the total situation over night. But we can do it one step at a time. And we're not doing this because we are short of tenants. We could fill the space allocated to smaller tenants at Capegate twice with the current retailer demand."

He says Capegate's first step will be to introduce performancebased leases that will give them security of long-term tenure.

"We will come to an agreement with the tenant over the level of turnover and other performance levels that (they) will achieve each year of (their) leases.

"If they achieves them, we will be bound to renew their lease when it ends."

Odendaal says other changes will take time; for instance, the gap between the rents of small tenants and the major retailers.

"Both landlords and small tenants need the large retailers and we can't cut off our noses to spite our faces.

"It will take lengthy negotiations to reach a point where the big and small tenants feel the rental differentiation between them is fair."

Old Mutual Properties also recently entered the debate on the plight of small retailers.

Old Mutual Properties, the landlord at seven major shopping centres in SA, said recently in a newspaper report that the landscape for supermarket retailers in the big shopping centres has changed dramatically with the growing challenge to their role as subsidised anchor tenants.

MD Ian Watt said there was a mounting expectation from landlords and smaller tenants for supermarket retailers to shoulder higher rentals and a greater contribution to the running costs of shopping centres.

Watt said supermarket rentals were no higher than they were 30 years ago.

Marcel Joubert, a vocal advocate for the rights of small retailers, has welcomed Odendaal's comments. Joubert is chairman of the South African Council of Retailers and chairman of Platinum Holdings, which houses upmarket brands Jenni Button, Hilton Weiner and Aca Joe.

He is no stranger to controversy, lashing out at the landlords of SA's shopping malls for the poor treatment of small retailers at the recent eighth African Congress of Shopping Centres in Cape Town.

The essence of Odendaal's statement is performance-based leases and "sanctity of tenure", he says. "We applaud that. That is a step in the right direction and it takes us closer to countries such as Australia and France."

He says that Odendaal is the second major landlord in 10 days to acknowledge publicly the escalating pressure on landlords to give small retailers a fair deal.

The campaign mounted by the South African Council of Retailers is beginning to bear fruit, he says. Joubert believes other landlords will be forced to follow suit.

Referring to the comments Old Mutual Properties made, Joubert says that this is the first time a landlord has publicly admitted to the iniquitous cross-subsidisation of the large by the small, adding its voice to the increasing calls for change.

He says the significance of this cannot be "overemphasised".

"The mighty Old Mutual property giant has spoken.

"Cross-subsidisation of the big guys by the small guys happens and it must stop."

Nov 26 2003 07:24:53:000AM Nick Wilson Business Day 1st Edition