Wine merchants complain London rents 'absolutely insane'
Independent wine merchants in London have branded rents “absolutely insane” and one of their main business gripes, while outside the capital increases are more moderate.
Benoit Thouvenin, managing director of the 52-strong Spirited Wines, which has around 40 stores in London and the remainder in the north east and Scotland, said “rent reviews are our main issue”, adding that some landlords were “still too greedy”.
With some of the stores it took on under the Nicolas banner, it has needed to look at relocation as “rents become too high”. “It’s very easy to increase the rent, but to match that with a sales increase is very difficult,” he told Harpers. High rates bills were also a “big burden”, said Thouvenin.
For London-based operator Jamie Hutchinson, co-founder of the Sampler, rents are “absolutely insane”.
“If landlords have multiple properties - even in a low demand situation they’re not looking to do anything other than an upward-only review. It seems they’d almost rather have an empty property than accept a rent decrease. We’ve found a lot of silly proposals of rent increases above RPI when there is decreasing demand for properties. It’s difficult when leases are outside the landlord and tenant act.”
Hutchinson said rates, particularly for his South Kensington store, were a major problem, and cost the equivalent of the salaries of two and a half staff members. “Councils should be trying to encourage rather than stifle growth,” he added.
But for retailers outside the M25, rents are not such a major concern. Hal Wilson, managing director of the seven-strong Cambridge Wine Merchants estate, said there were “no shocks or surprises”. For Wilson, maintaining good relationships with his landlords and using “a more direct approach is useful”. In the past he has also employed agents to help with giving evidence about what it considers to be a fair rent. While all of his shops have upward-only review clauses, he said that in the past few years the biggest increase was 5%, while the others had remained “pretty much unchanged”.
Chris Piper, founder of Devon’s Christopher Piper Wines, said rent increases “weren’t really an issue”. He operates one retail outlet in Ottery St Mary, as well as a host of office and warehousing space, 65% of which is rented. “I haven’t experienced much more than inflationary rent increases,” he told Harpers. “Once you’re outside London and not in a city centre it’s not as bad.”
Piper said there were “too many excuses” from merchants these days, adding, “I’m sure if you’re in Fulham of Edinburgh it’s a problem, but people have got to fight a bit more”.
Joanne Tuvey of Colliers International, said the rental market in central London was “extremely buoyant” with rents continuing to rise. In areas of particularlyl high demand “landlords have all the negotiating power and tenants will agree almost any terms in order to secure a lease in these locations”.
But Tuvey said the picture was very different in outer London and on regional high streets. “Vacancy rates in regional high streets are extremely high and in our opinion, it is a tenants’ market”, with landlords more agreeable to upwards and downwards rent reviews.