A high-profile Perth chef has made a public display of his anger over a hike in his restaurant’s rent, scrawling a message about the $70,000 increase across the eatery’s windows.
Alain Fabregues, owner of Bistro des Artistes in the upmarket Perth suburb of Subiaco, vented his frustrations with the strain of retail rent by writing “My landlord Lepley Property is increasing our rent by $70,000 to $279,000 p.a.” across his restaurant’s window, reports PerthNow.
“$1160 rent per day!! Subiaco is not Paris or London. $1000 per square metre,” the chef added.
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Fabregues told PerthNow he had no choice but to endure the rent rise because he still has two years remaining on his five-year lease and believed writing on the windows was the only way he could draw attention to his concerns.
“Because you cannot fight someone who is worth hundreds of millions of dollars in court,” he said.
“I don’t have that kind of money. So the only thing I have is public opinion.”
But Chris Lang, chief executive of CommercialPropertyMadeEasy.com, told SmartCompany a landlord cannot arbitrarily increase rent.
Lang says there are several potential situations that Fabregues may have found himself in. He says that Fabregues, or a leaseholder he may have taken over from, could have previously entered into a pre-agreement on the raise in rent, or Fabregues may have let the lease expire but did not want to walk away.
Lang says the premises may also have been due for an option or market rent review. In this case, he says Fabregues may have access to a clause that would allow an independent valuer to review the rental increase.
“If that happens, and the valuer determines the rent is what it has been raised to, then the tenant has no complaint and he was obviously receiving a very low rent beforehand,” says Lang.
Lang says that while retail rents may have increased in the last few months, those increases have generally been fixed increases, likely to have been agreed “in better financial times”.
“I think the retail rents have increased because they have had fixed increased built into the lease,” he says.
“It is wrong to say rents have been escalating across the board.”
Lang says the real problem for retailers is that rents have outstripped profitability.
“But since the global financial crisis, retail turnover hasn’t increased, and while many retailers have spoken of a good Christmas, they are still playing catch up. Profitability hasn’t gone up, but rents have,” he says.
CBRE head of research, Stephen McNabb, told SmartCompany he agrees there has been a flat patch in retail rent over the last few years.
“But in the last 12 months or so, there has an improvement in CBD rents, particularly on the east coat,” says McNabb.
He says there has been around a 5% to 5.5% increase in the last 12 months, whereas there was only around a 0.3% increase each year over the last two to three years.
“That is consistent with the trade environment,” he says. “There has been a top-line improvement.”
McNabb says there is typically a lag between that retail improvement and the increase of rents. He also points out retail sales have slowed in Western Australia.
SmartCompany attempted to contact Fabregues, but did not receive a response prior to publication.