Finance, Retail

“It’s 100% absolutely impossible”: Sydney business says exorbitant retail rents forced it to trade Mosman store for a warehouse after 30 years

Emma Koehn /

Oz Resort owner Jacqueline Major. Source: Supplied.

An independent retailer in Sydney has hit out at commercial landlords, saying exorbitant rents forced her business to relocate from its home in Mosman after nearly three decades.

Managing director of Oz Resort swimwear, Jacqueline Major, says her company was paying retail rents upwards of $130,000 a year for its shopfront in the North Shore suburb of Sydney, which became simply unsustainable given the store’s revenue was sitting just on $1 million a year.

“There’s nobody [in retail] doing the sort of money to sustain that now, it just doesn’t even equate,” she tells SmartCompany.

When Major spoke to her landlord about the significant pressure rents were putting on the business, she says she was told, “you’re the only one with a problem”.

“I said, ‘you’re my problem — it’s the rents all up’.”

Major decided the best choice was to find a new setup, so after trading in Mosman since 1988, she took the plunge to relocate the whole business to a warehouse she had bought years ago in Balgowrah.

I made the decision to move it all into the warehouse, and the thing is, we’re now getting people coming to us. We have change rooms set up there — and people really don’t mind it.” 

Major says she’s not alone, either; she knows of other retailers in Sydney looking for warehouse space instead of traditional retail shopfronts to set up their operations in a way that is much more cost-effective.

“I’m loving it — I wish we had done it years ago. And thanks to Google and that sort of thing, people are still coming,” she says.

Major predicts even more retailers in Sydney will be pushed into using new shopfront models, saying one only needs to look at the high turnover of tenants in areas such as Paddington and Mosman to see shopping strips often don’t keep new tenants for more than a year or so before rental pressure gets to them.

People that have a passion like I still do for swimwear, right now, how are you able to do it? We can go online, or we can do what we’re doing by warehousing,” she says.  

The move away from Mosman means Oz Resort is paying “nowhere near” what it was previously in terms of shop overheads, which Major says is giving the business new opportunities to capture customers.

“We can now afford to do a bit of discounting, and by undercutting some pricing, we’re getting a lot of people in,” she says.

The pressure of commercial rents on the retail sector has been a fiery issue over the past 12 months, with even the likes Premier Investments chairman Solomon Lew saying the situation was forcing his company to close flagship locations in Melbourne’s Bourke Street Mall.

Other company founders have taken drastic approaches to negotiating rents: in 2017, SumoSalad founder Luke Baylis defended a decision to place the leasing entities of the food company in voluntary administration to resolve a rental dispute with shopping centre giant Westfield.

Having operated in the retail space for 30 years, Major says the current rental pressure isn’t good for brands or the community, given the high turnover of shopfront tenants.

“Landlords just want to get anyone in there and get some rent,” she says.

“I don’t know one retailer, except for those big brands with multiple retail stores, that can sustain these rents.”

NOW READ: SumoSalad’s voluntary administration plan reportedly paying off in Westfield rent dispute

Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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  • Craig Heppell

    Are retail/commercial landlords oblivious to the relentless march of online shopping?

    • Gabriella

      Guess they (landlords) are milking it while they still have the chance, the writing is on the wall for all to see.

  • Susan Steel

    This is exactly what is killing local “villages”. Freshwater on the northern beaches is a case in point, the independently owned shops are being crushed under exorbitant rents – Landlords are asking rents that are so high – no one has been able to afford the 3-5 empty spaces that are on Lawrence st. (If rents are high – but people are willing to pay – well, so be it – but Freshwater rents are ridiculous). I have had a Toy shop in freshwater for over 6 years. Now that the premises are to be redeveloped -which personally I think is a good thing, it would made perfect sense to rent one of the many empty and available retail spaces literally across the road. But in this relatively quiet village – the rents requested ( and are non-negotiable!!) – are similar to Corso Manly rents (per sqm). It was a no-brainer – down to Manly I went. I found a fantastic location on Sydney Rd, just off the Corso. So much cheaper per sqm than Freshwater. But was sad to leave and customers in Freshwater have lost another independent, unique offering. Not only are the rents there high, but the landlords practically taunt the lessees. Offering leases, not offering leases, increasing rents suddenly and unpredictably. Most not knowing when or if their premises are about to be redeveloped (talk of it for over 10 years). No chance to sell a business. I heard recently one small gift shop in a tiny premises, has been asked to pay a 45% increase in rent! I blame a mixture of landlords who forget they are dealing with peoples livelihoods, many of whom have put their house on the line to get a business started, And agents who give misleading advice. Thinking business is business, but small business – with the magic they bring to communities are due some decent (only asking market -fair rate) consideration.

  • Pat Grieff Verma

    After an unbroken record of 40 years as a retailer and services business I closed my shop in Neutral Bay. The rent should have been a third less but

  • Pat Grieff Verma

    The landlord was not interested
    After being vacant for 3 months I noticed someone had moved in. So why should rents be lowered when there is an entrepreneur waiting out there to pay the high rents and overheads.

    • Susan Steel

      not the case in Freshwater – just empty shops

  • Jan Deane

    i notice that a lovely shopping area near me, Bridport Street in Albert Park, is slowly being taken over by the chains. Seed, Seed Kids and Trenery, Mecca Cosmetica have been there for a while and a year or two ago, Country Road moved in taking up two shops previously rented by independent women’s apparel retailers – obviously Country Road is a more attractive proposition for a land lord.
    If people don’t support their local shops, these strips will just become a replica of the shopping malls which would be a great shame.
    Support your local shops or don’t complain when they no longer exist!

  • Denise

    The same thing us happening in the U.S.A. rent is high here also I am certain rerailers will have to be more creative hete as well. The retail industry is changing!

  • Joslin Hartley

    Extremely sad that exorbitant rents are destroying small businesses and defining our way of life with limited choices.

  • William Pintainho

    Whilst I agree with the fact that rents are too high but this story lacks the other side of the arguement to be balanced. I see the greatest problems stems from a system of government which is dependent on Land tax revenues that insists on forcing landlords to increase rental costs to compensate for the 20 – 25% increases they incur. Add the fact that banks generally have increased investors interest costs as part of the governments way to manage overall housing affordability and the landlords are suddenly not as profitable as the public thinks. This is just another reason why we try to fix one problem and create a new one. Balance is obviously the key but when the media seizes on a topic in a one sided way it does not help the situation. Especially when the politicians then over react because they are interested in getting some votes but don’t fully understand the new problems they create.