Rent holidays called for

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By PHILIP CHANDLER

A long-time Queenstown restaurateur believes businesses like his that’ve been forced to close due to Covid-19 deserve a rent holiday “because our turnover is zero”.

Blue Kanu co-owner Grant Hattaway’s suggesting they pay no rent for three months then, “to be fair to the landlord”, add three months at full rent onto the end of their leases.

“One thing’s for sure, the value of all businesses has gone down including the landlords’ business – I don’t see why we should have to pop up with all the money and they carry on.”

He says there’ve been varying responses from local landlords.

“Some are not answering emails or texts.

“There’s some good landlords who are throwing rent holidays.

“Some are giving 50 per cent, some 30 per cent, there’s some giving nothing and waiting to see who blinks first, or maybe waiting for some government intervention.”

Hattaway says while there seems to be money for other sectors, commercial rents “seem to be the elephant in the room that no one’s talking about”.

If landlords don’t come to the party, “you could see widespread empty shops in the not-too-distant future, and, not only that, you have no one lining up to sign any leases”.

Landlords also need to exercise restraint when businesses return, he says.

If turnover’s only 70 per cent, say, of what it used to be, “that means zero profit for probably 90 per cent of operators in town”.

The move back to market rents needs to be gradual, Hattaway says – “and, let’s face, it, the market rent has now dropped considerably”.

Another veteran local restaurateur, Mark Jessop, favours landlords basing rent, for the foreseeable future, on a percentage of a tenant’s turnover – for example, five or six per cent – which currently, of course, is zero.

“That sets the platform for gradual growth into the future, as well, then we’re not having to continually negotiate when we get to 25 per cent of old turnover, or 50 per cent.”

He’s heard that commercial landlords “are not sticking their head in the sand, they are talking to their tenants and making offers and coming to the party”.

Meanwhile, local lawyer Elliot Goldman advises that, following the Christchurch quakes, many leases include an emergency clause that applies to situations where premises can’t be accessed for normal business operations.

It means, he says, that a fair proportion of rent and outgoings cease to be payable during that period.

scoop@scene.co.nz