H&M - fighting the two tier retail market and daring to push for better clarity on turnover rents
H&M is the latest retailer to confront its landlords about this 鈥榯wo tier retail market鈥 in an attempt to explore and negotiate more favourable terms.
H&M is the latest retailer to confront its landlords about this 鈥榯wo tier retail market鈥 in an attempt to explore and negotiate more favourable terms. H&M鈥檚 stance is particularly interesting in that they are not only pushing for turnover rents - which we are seeing far more often of as a retail legal team 鈥 but they are also expressly arguing that all returns (including online returns) are deducted from that store鈥檚 revenue. This is a when negotiating turnover rent provisions and landlords aren鈥檛 always keen to bite the bullet and often prefer to keep the wording vague to allow room for argument.
It will be interesting to see whether this push for certainty becomes the norm? We鈥檇 certainly welcome it on behalf of our retailer clients. Arguments like this are expensive and an unnecessary distraction - and we will continue in our fight for transparency in this area. H&M is also offering landlords 鈥渢otal occupational deals鈥 where they offer landlords a turnover rent in return for an all-inclusive lease that would cover rent, service charge and business rates. Ultimately, the retail property market is driven by supply and demand so going forward landlords may have to accept 鈥渢otal occupational deals鈥. Retailers need to look at what their options are in such a difficult market.
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