Perspective: with Heather du Plessis-Allan - Why aren't shops open in level three?
Sir Bob Jones says the state should not get involved in business arrangements between landlords and tenants.
His comments follow calls from the likes of Retail NZ chief executive Greg Harford and Franchise Association chief executive Robyn Pickerill for state intervention.
"The Government's apparent inability to deliver proportional rent relieffor commercial tenants will have a significant impact on the survival of many retail businesses," Harford said.
Pickerill said rent payments for May were now due in a landlord-tenant stand-off and a survey of 100-plus businesses that found 74 per cent said it was very likely a significant numbers of businesses would close if the Government did not act.
But Jones said such business arrangements were not the affairs of state.
"I think you will find the Government will not meddle with commercial leases, nor should they," Jones said.
"Dealing with troubled retailers is an everyday issue for shopping centre owners and people like us and there's no need for the Government to become involved," he said.
Robt. Jones Holdings owns 26 buildings, $1.5 billion of property in Wellington, Auckland, and Glasgow, Scotland, with 700 tenants. Jones says it is New Zealand's largest private CBD owner and rents to many Government departments.
Two days ago, the Herald reported that NZ First was understood to be blocking Labour's plans to intervene in the commercial property market to force rent negotiations due to Covid-19 disruption.
But NZ First was reported to think Government moves would represent an intervention in contract law in an area where many leases agreed since 2012 included provisions for emergencies which appear to cover the disruption. It was also reported to think that intervening in the leasing market could allow large foreign-owned companies to game negotiations with building owners, which were largely New Zealanders.
Campbell Barbour, Council of Retail Property chairman, said 75 per cent of 5000 retail tenants got rent help from landlords. Most landlords did not need to offer help but had deferred, reduced or managed rent during the lockdown.
Less than a quarter of tenants were offered no help, he said. The tenants had either traded through alert level 4 as essential services or are larger corporate organisations.
"Less than half of all tenants have accepted the offers made by landlords for rental assistance, with many indicating they are waiting to see if the Government will come to the party particularly for smaller to medium-sized businesses.
"This situation means more than half of tenants have not paid a cent under their lease in April, and early indications show that this is likely to continue into May," Barbour said.
Campbell Barbour (right) with Costco's Patrick Noone (left) and mayor Phil Goff. Photo / Dean Purcell
"In general, where rental reductions have been agreed the figure negotiated generally sits at around half of monthly rental. This has taken the form of deferrals or abatements or a combination of both. We are also aware that arrangements have included other changes to contracts around matters such as rental reviews and lease term extensions," Barbour said.
The range of negotiated outcomes highlighted how many different circumstances exist across the retail sector and the difficulties in attempting to apply a standard solution. "We are concerned about any misperception that landlords are not supporting tenants at this time, particularly in the retail sector. This is simply not true. A majority of landlords and tenants are working through this to ensure that both businesses are well placed for recovery", Barbour said.
"This situation is not of property owners' or their tenants' making. The Government has decided in the best interests of our nation's health to continue to largely prohibit retail trade under alert level 3. Property owners should not be expected to carry the can for rent due to the Government's ongoing call," he said.
