Virus reveals big rent divide

Embattled business operators hope the economic woes of the past few months will trigger a permanent rethink about standard rents for Margaret River’s main strip.

Traders have struggled for years with high rents that hurt profits, while relying on main street exposure to maximise business.

But two different stories have emerged during the COVID-19 crisis as many shops closed down or radically changed their offering.

Extensive discussion with traders has revealed tenants with landlords living in the region have enjoyed rent holidays or significant cuts to charges — while some traders with landlords from outside the region remain locked in bitter disputes.

The State Government’s new code of conduct for landlords dealing with stricken tenants would alleviate the short-term pain for many traders just getting back on their feet and still facing the town’s fast-tracked roadworks plus the looming winter lull.

But operators believed the past few months’ disruption should lead to permanent downwards pressure on commercial rents.

Business advisor Barbara Maidment reiterated reports of differing outcomes for traders negotiating with landlords.

“With rare exception, this is not a good time to open a new business, and generally, it will be about a year give or take before we reach our new ‘normal’ in Margs — a long and possibly painful adjustment all the way around,” Dr Maidment said. “I seriously doubt there will be any long-term relief or reconsideration. Some landlords are refusing to negotiate anything even at the moment, when businesses have had to close and have zero income.”

Property owner Gary Wightman believed future vacancies would drive standard rents down.

“The trouble with commercial landlords is if they don’t keep their rents up to a certain level, their property values fall,” he said.

Christine Tomkins, whose business The Good Olive has shut for good, said a neutral arbiter like the Shire of Augusta-Margaret River had to bring parties together.

“I’m lucky I can get out, but the town needs to work together,” she said. “I wish the landlords would work together with the Shire to save the town, the Shire and local businesses, to maintain business in the town. It’s going to be very hard for people to keep going.”

Local property owner Mark Warren said rents should follow supply and demand.

“If rents collapse ... it means trade has collapsed, and the underlying basis for your business has disappeared,” he said.

When Federal schemes like JobKeeper ended in September, more businesses would be put to the test, Mr Warren said, which would influence ongoing rents if vacancy rates continued.

Shire president Ian Earl said more clarity would emerge once trade normalised.

“At some stage there has to be a recovery,” he said. “We’ll see that over the next six to 18 months.”

The Margaret River Chamber of Commerce said ongoing changes in restrictions made the future unclear for traders. “The chamber will continue to monitor how our businesses recover and where our advocacy will be most productive,” executive officer Annie McFie said. The main message of the new code was for landlords and tenants to work together, she said.