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High rents behind Subiaco’s empty shop windows

The vexed issue of vacant shopfronts is not unique to the City of Subiaco, leasing advisory expert David Halvorsen says, citing similar angst confronting authorities and communities in central Perth, Fremantle and West Leederville.

Mr Halvorsen, a speaker at the City of Subiaco’s inaugural Subiaco Business Conference to be held at the Subiaco Arts Centre today, said the reason there was so much vacancy was that retailers could not afford to pay the rents.

Responding to questions about vacant shopfronts on Subiaco’s premier shopping strip — Rokeby Road between Bagot and Roberts roads — he said the State Government could consider using levers at its disposal, such as tax incentives, to encourage landlords to fill vacant shops.

Landlords could help by having “realistic expectations” and offering businesses that were losing money an option to exit their lease.

Despite commentary blaming local governments for struggling retail strips, Mr Halvorsen said many business owners who were great entrepreneurs with good ideas got caught out by fine print in complex, inflexible lease agreements.

These agreements, often 60 to 80 pages, tended to favour landlords. When there was a change beyond anyone’s control, there were plenty of remedies for landlords but little in the way of negotiating power for tenants, who could lose expensive fit-outs, equipment, their business and, sometimes, their home.

If you paid $750,000 for a house and things changed and you had to sell for $650,000, you lost $100,000. If you signed a five-year lease at $150,000 a year, and things changed, you were stuck with paying $750,000 over that time and had no way of knowing what your total losses might be.

Mr Halvorsen said there was little information for tenants about the going rental rates in any given retail strip and a public register of who was paying what would be an excellent public service for small businesses.

“If you are going to lease a shop, how do you know what a reasonable rent is,” he said.

City of Subiaco mayor Penny Taylor said taking on a commercial lease was one of the biggest risks for a small business. She added that the council wanted businesses and landlords to be able to strike agreements that “are acceptable to both parties”.

“No one wants to see vacancy signs,” Ms Taylor said. “Our residents and ratepayers want to see shops full.”

Ms Taylor said the Subiaco Business Conference was designed to help Subiaco business operators get access to skills, support and information.

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