In a previous piece I wrote, I got a lot of flack for my naïve view on what some people said was “far more complex than I could imagine”.
At the time, I was curious about why there were so many new office blocks being built, while so many of the old ones were standing empty.
I also refused to understand why so many small shop owners renting space in malls were forced to close shop when they could no longer afford to pay the rent.
It seemed to me to be callous and unnecessary, especially since there was this constant talk about supporting small businesses and entrepreneurs.
At the time, I suggested that landlords look at new methodologies when it comes to rental stock.
Instead of a fixed monthly rental agreement, I was wondering about something a bit more flexible that would reflect the ebb and flow of the market.
Another thing that bothered me, was the fact that landlords would rather let a property stand empty for months on end, than rent it to an entrepreneur on a rental sliding scale that takes into account the monthly turnover.
In other words, instead of charging a fixed monthly rent of say R50 000 for a shop, rather charge 25% of revenue for the month.
Some months will of course be better than others, but the business is kept afloat and the landlord is always guaranteed an income.
RENTAL: Deal negotiations
Well, it turns out I wasn’t that naïve at all.
The lockdown is forcing some of the country’s biggest landlords to look at exactly this way of doing business.
The country’s leading clothing retailers, who are not allowed to trade during lockdown, have negotiated a deal with their landlords to pay just 20% of their regular rental.
This makes a lot of sense, since they are currently not making any money.
Presumably they have also given their customers grace from having to repay their credit.
Smaller retailers are also getting discounts on their rent during this time.
I don’t claim to know much, and most of what I say are questions and suggestions, but the lockdown is teaching me that some of those questions are valid though.