Are tenants forcing commercial rental pacts to be re-done?

The slowdown in the retail sector is putting pressure on rentals as well. In Delhi, commercial rental contracts are being renegotiated. With the economic slowdown, commercial and retail tenants want rentals to be renegotiated.
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Nov 07, 2008, 01.01 PM | Source: CNBC-TV18

Are tenants forcing commercial rental pacts to be re-done?

The slowdown in the retail sector is putting pressure on rentals as well. In Delhi, commercial rental contracts are being renegotiated. With the economic slowdown, commercial and retail tenants want rentals to be renegotiated.

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Are tenants forcing commercial rental pacts to be re-done?

The slowdown in the retail sector is putting pressure on rentals as well. In Delhi, commercial rental contracts are being renegotiated. With the economic slowdown, commercial and retail tenants want rentals to be renegotiated.

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Nayantara Rai (more)

Reporter, CNBC-TV18 |

The slowdown in the retail sector is putting pressure on rentals as well. In Delhi, commercial rental contracts are being renegotiated. So, are tenants calling shots?

 

Here is a verbatim transcript of Nayantara Raiís comments on CNBC-TV18. Also watch the accompanying video. 

 

A children's clothing brand retailer occupying 1,000 square feet of space at Connaught place refused to pay its monthly Rs 3 lakh rent in October. Despite signing a contract with a three-year lock-in period, the retailer wants the owner to reduce the rent by half in just one year. Similarly, a Supreme Court advocate was taken by surprise last week when his tenant returned the keys of his commercial space. The tenant, it seems, does not want to occupy the office space unless the rent is reduced drastically. Clearly, tenants are now are calling the shots and owners seem have to little choice.

 

With the economic slowdown, commercial and retail tenants want rentals to be renegotiated. The message is clear: "Lower rental or we move out." And it is not just existing leases that are under pressure. 

 

Mall developers are struggling to fill space. Six months ago, in Delhi's upmarket Saket area, a leading developer was renting out a counter in its food court for Rs 1.35 lakh a month. Now, the current rate is Rs 70,000 per month. Mall rentals had been almost doubling on an annual basis since 2006. Retailers have been complaining that rentals make up 25% of their turnover as opposed to the international practice of 8%. Now, itís payback time. 

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