Mall landlords forced to cut rents by 14% as major retailers play hardball

The Foschini Group, or TFG Limited, has managed to extract an average cut in rental costs on its lease renewals over the past year of 14%. It is the only major retailer to disclose specifics regarding the reductions it has achieved in rentals. It achieved this considerable reduction in average rent across 662 renewals across TFG Africa, which equates to more than a fifth of its 3 000-plus store footprint. Remarkably, on average, it is paying 17.

It disclosed limited detail earlier this month, but highlighted that its 371 lease renewals were achieved with “further base rental reversions and escalations in line with CPI” . TFG’s average renewals are at 6%. Mr Price Group says returns on new stores “continue to be highly attractive” with an “average payback period of 12 to 18 months”. In effect, TFG is now paying lower rents at stores that have had leases renewed than it was pre-Covid.

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Wonderful! Now to get the parking fee's reduced by 75% for more feet in the centre's

Just my two cents (that no one asked for)……..commercial retail space is in for hard times in SA. Time to buy into high quality warehouse space. Amazon coming changes everything!

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