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Friday, July 3, 2009

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Marathon Mall tenant: 3% rent increase too much to ask for By VERNON CLEMENT JONES ~ Guardian Business Editor ~ vernon@nasguard.com: Mall at Marathon is coming under pressure to wipe out an annual rental increase as the recession wears on and tenant ability to meet even a three-percent hike is stretched to breaking point. "They told us in a letter that upon our renewal they would be charging us a three percent increase this year (June)," said one tenant last week, showing Guardian Business the correspondence from mall management. "There's been talk about them helping out their tenants in this recession, but to charge three percent more at this time is ridiculous." Marathon GM The merchant has now boarded up his Marathon location, moving to a street store only minutes away. He, nonetheless, maintains another retail business at the indoor shopping Mecca. It was little more than a year ago Guardian Business reported that the mall, held by a consortium of Bahamian families, had moved to lower its then five percent yearly increase to three. The drop, say merchants, was encouraged by the sluggish economy and the loss of key tenants like Solomon's Mines, once occupying an anchor store still empty some 16 months after the retailer's departure. This latest merchant to shut shop and seek cheaper if not greener pastures is the first to openly assert that two point drop in rental increases may not be enough to stem tenant losses as the recession waxes on. The tough times aren't, in fact, expected to significantly ease until 2010, say analysts, pointing to projections for delayed U.S. recovery. That's despite an increasing number of positive economic indicators, although an uptick in retail sales simply isn't one of them. The result has been an industry shift to lower rent at America's malls, says an April report by the Associated Press. So-called "asking rent" have actually fallen more than a full percentage point from the year-ago period. Marathon stands in defiance of that U.S. trend, says the Guardian Business source, concerned his landlord's ambitions have simply outstripped the revenue capabilities of tenants. That's to say nothing of an island economy, itself, grappling with double-digit inflation. Marathon Mall officials refused comment Monday. As Guardian Business reported last week, it and chief competitor Town Mall have ramped up their rivalry in an effort to better retain their current roster of retail tenants. Defections are nonetheless in play, as merchants scrutinize foot traffic counts and sales at both shopping plazas. Town has largely avoided the kind of vacancy rates of many U.S. malls, which continue to rise above six percent. Still, there remain merchants prepared to dish out sizeable amounts just to be in a space at Marathon. Glazier DQ is now planning its move to the east-end center this fall. "We expect the Marathon Mall store to do well," co-owner Derek Osborne told Guardian Business. "I guess the economy influenced sales there, but we have a much brighter outlook for performance at the mall." Tuesday, June 23, 2009