John Lewis Partnership threatens landlords with rent cuts

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High Street
Rents:

John Lewis is said
to be threatening its landlords with rent cuts, a desperate measure
to reduce its operating costs as trouble on the high street
continues.

The leading UK
retailer, with its famous John Lewis and Waitrose stores, is said to
be informing its landlords in certain shopping centre locations that
it requires rent reductions, otherwise it will withhold 20 per cent
of its quarter’s service charge.

As reported by The
Scotsman newspaper, it is not known if the flagship Edinburgh
store is affected, but it is known that several other leading sites
are.

In Scotland, John
Lewis has three major department stores, in Aberdeen, Edinburgh and
Glasgow, plus a number of Waitrose supermarkets. According to a BBC
report there have been few signs of efforts by landlords to cooperate
with the retailer to reduce its costs.

The retail giant has
said service charge increases from landlords have been “simply
not acceptable” and have resulted in the high street firm doing
“everything we can to reduce our cost base”.

However, John
Lewis’s threat to to withhold one-fifth of its service charges
would not result in a threat to foreclose on leases, as could be the
case if rent was withheld, but it could result in legal action being
taken by its property landlords to recover any unpaid service
charges.

John Lewis claims
that its service charges bills have risen by as much as 20 per cent
over three years. These are fees in addition to rents the retailer
must pay as part of its lease obligations to cover services such as
insurance, heating and security.

A John Lewis
Partnership spokeswoman had said:

“At a time when
we are doing everything we can to reduce our cost base, we have
unfortunately been faced with regular increases to the service
charges we pay for some of our shops in shopping centres.

“Over the last
three years we have seen an increase in service charges of 20 per
cent and these continued increases are simply not acceptable,
particularly in the absence of strenuous efforts by landlords to work
collaboratively with us to reduce these costs.

“We are
investing more in our current shop estate than ever before to do
everything we can to encourage customers and grow footfall, and we
hope that our landlords will support us in continuing to do this.”

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