Newsagents, COSBOA say retail rents are unfair

Newsagents are at the mercy of their landlords when it comes to negotiating rents and leasing terms, the Australian Newsagents Federation claims.

“Newsagents have inadequate laws to protect them against some landlords’ misuse of turnover figures in rent deliberations,” the ANF, which represents 1,500 members, says in its submission to the Productivity Commission’s inquiry into the retailing industry.

“Common unfair trading practices encountered by newsagents include “harsh terms and onerous lease obligations”, the submission says.

Furthermore, the ANF says specialist tenants such as newsagencies pay significantly higher rents per square metre than the major supermarkets “but still have to compete with these stores for sales”.

As a result, “rent increases can only erode an efficiently run newsagent’s net profit,” the ANF says.

The ANF argues newsagents are constrained because the prices of the majority of their products (e.g. newspapers, magazines, greeting cards and lottery tickets) are fixed, meaning they cannot increase prices to cover increase in costs.

The organisation is demanding the Federal Government establish a national leasing ombudsman and a national registration of retail leases to ensure fairer rental rates and better tenancy rights.

The ANF believes an ombudsman could ensure that newsagents whose leases are up for renewal in shopping centres are provided the first and last right of refusal for a new lease so landlords cannot threaten existing tenants with take-it-or-leave-it type negotiations.

The emergence of an unfair playing field is also identified in the Council of Small Business Organisations of Australia’s submission to the Productivity Commission.

It highlights the control of retail leasing by “the large landlords” and the inability of bricks-and-mortar retailers to compete will online sellers on price due to the major overheads associated with rental costs.

Continued increases in lease and rents will make bricks-and-mortar retailers, a category that includes newsagents, “even less profitable and less sustainable,” the organisation argues.

“In the end there can only be so many coffee shops and food outlets – the cost of rent must drop, or shops will be empty. The cost of change must be managed or compliance problems will grow,” COSBOA says in its submission.

This article first appeared on www.propertyobserver.com.au, Australia’s top site for news and advice for property investment.