“It would be financial suicide to continue”: business forced to close after 13 years due to “astronomical” Westfield rent increase
Thursday, January 15, 2015/
The exterior of Cafe Gaudi in Woden Plaza Shopping Centre
A Canberra café which had been trading for 13 years served its last customers in December after the owners say a 30% increase in rent by landlord Westfield left them no option but to close.
The closure of Café Gaudi in the Westfield-owned Woden Plaza Shopping Centre comes at the same time as reports by Fairfax of retailers in the centre struggling to keep their businesses afloat in the face of rent hikes.
In a Facebook post in December, Café Gaudi co-owner Marivi Estanillo said the café had “regrettably” closed “due to 30% astronomical rental increase and the poor performance of the neglected Woden Plaza Shopping Centre precinct”.
“We have sadly decided it would be financial suicide to continue trading under these circumstances,” said Estanillo, who operated the business with her husband.
But in a follow-up post in January, the owners said they are considering re-opening their business elsewhere.
“It was a shame we had to go but we were left with no option,” they said. “However, this is not the end of us. It’s the end of us having to do anything with Westfield and its associates.”
The couple said they have been “overwhelmed” by the support they have received from customers and feel they were “profoundly underestimated by Westfield”.
“We were in the Woden precinct for 13 years and we added value to the whole shopping centre,” they said.
“Best of luck to the remaining tenants in Westfield Woden. They will need it.”
Fairfax reports other retailers in the shopping centre have complained of declines in overall visitor numbers to the centre and say Westfield has offered cheaper rental deals to new tenants, instead of trying to support long-term tenants. There are also concerns about the types of retailers being offered space in the centre, with some retailers now finding themselves located next door to another retailer selling the exact same products.
“They will put anyone in with no regard to the tenancy mix,” one tenant told Fairfax.
“The better the trading, the better their ability to pay rent. Poor tenancy choices are causing some tenants to go broke.”
Another recent departure from the centre is menswear chain Man to Man, with the Woden store one of 20 outlets closed as a result of the chain falling into voluntary administration in December.
Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany the closure of small businesses in the face of escalating rental costs is a “common story and a sad story”.
“There are no winners in this, except maybe Westfield,” Strong says.
Strong says the federal government’s review of unfair contract terms may provide some relief for SMEs as rental contracts for landlords are currently “heavily in favour of the landlord”, but he says what is really needed is “cultural change”.
“The fact that the big landlords know when someone is going to fail and don’t tell that person before they sign the lease is a failure of ethics and a failure of community,” he says.
SmartCompany contacted the owners of Café Gaudi and Westfield but did not receive a response prior to publication.