Since opening last October, Westfield Groups' 43 acre London shopping centre of the same name has been surrounded by controversy. The heavily promoted Luxury Village opened half full, the décor was labelled ‘cold and artificial’ and the first shoplifter was arrested – just 3 hours after its opening. But nothing has been more prevalent in the news than the bickering between the Australian landlord and its retailers over, you guessed it, service charges.
Westfield controversially raised the charge from a ‘reasonable’ average of £8.50 a square ft to £14 shortly after opening...putting the charge on the 10,000 sq ft Sports World store, for example, at £140,000! It seems a lot to me, even for a prime location like White City, so what, exactly, does the charge cover?
According to servicechargecode.co.uk, a service charge is made up of charges for services which are “beneficial and relevant to the needs of the property, its owner, its occupiers and their customers”. Such charges could include “the provision of heating, lighting, cleaning, security, maintenance and repair works and the replacement of fabrics etc beyond economical repair”.
...eh? This is where I show my true colours as a private residential tenant and down-right ignoramus when it comes to commercial property practices; I thought that’s what you paid your rent for!? Silly me.
In response to the complaints of its many, many tenants, charges have finally been dropped, and though Westfield Group insist that it's normal practice to adjust charges after a few months of testing trading, I suspect this statement from MD of the centre, Michael Gutman, is more about making excuses than telling the truth; “We’re starting to get to the point now at Westfield [London], with six months under our belt, of understanding the trading patterns of the building and getting a much more precise view of what the service costs should be”.
Mmm...yeah, and you’re also sick of hearing retailers bitch and moan about it, and are slowly realising that your footfall figures aren’t quite as recession-proof as you’d first hoped!
Ho hum, whatever the reason for the reduction in rates, I’m sure its already struggling tenants are happy, and hoping this will help to stop them joining the raft of other retailers that have already closed in the centre - You'th, Kate Kuba, Principles and Blooming Marvellous, anyone? Fingers crossed!
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