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A battle is brewing between Westfield and some of its long-term tenants, who are speaking out against "frustrating" rent increases imposed as the credit crunch bites.
Paul Zwart, a Westfield Manukau City tenant for more than 20 years, says a rent increase of "thousands" is threatening many of
the mall's stores, which have been barely breaking even late into the Christmas-shopping period.
"Would someone like to bring to the attention of Westfield NZ and its leasing team that the world is in a recession," he said in a letter to the Herald. "Westfield seems to think it can continue to increase rents and operating costs with no consideration of the consequences."
A long-term Manukau tenant, who did not want to be named, said he and his staff were "working their socks off" to get by - and the latest rent increase was adding insult to injury.
But for those stuck in a long-term lease agreement, there is nothing to be done.
"We are losing money at the moment - all of us are - but lowering rent is not in their [Westfield's] vocabulary," he said.
"We'll have to go bust before they'll even entertain the idea.
"I know they don't dictate the economy as it is now, but we're working our socks off and we're not making any money.
"I don't even draw a wage because of it, and I'm having to think about cutting staff, which is something I really don't want to do."
He wanted to get out of Westfield when it opened 40 more stores earlier this year, but there was no wiggle room in his tenancy agreement.
"Basically, I'm in a lose-lose situation," he said. "I'm paying big bucks and I'm hurting."
Westfield shopping centre management general manager Linda Trainer denied rents had increased by 20 per cent, but refused to be specific.
Rental reviews were conducted annually and aligned with the CPI (Consumers Price Index) - this was the most "fair and reasonable" method, she said in a written statement. CPI for the year ended September 2008 was 5.1 per cent.
"Westfield Manukau City is experiencing sales growth and an increase in pedestrian counts; and Sky City Cinemas are performing well - we understand they are in the top three in the country, which indicates the centre is going from strength to strength."
Trainer said Westfield was aware of market fluctuations and took a long-term view. If a retailer was experiencing hardship, Westfield took "proactive measures" to assist.
She did not elaborate and did not return calls.
Flavor a clothing shop at Westfield Manukau has found the economic climate too much to handle and called in the liquidators.
It closed on Boxing Day after selling everything in stock for $5.
Zwart warned other would-be Westfield tenants to be cautious when signing a long-term lease. "Anyone considering taking a new lease in shopping malls should think twice," he said in his letter. "Do not sign a long-term lease."
Another shop owner said retailers needed to check the numbers and prepare for the worst-case scenario before agreeing to a long tenancy.
"This Christmas, there have only been three days we achieved our target, and we are well behind for the month of December," he said. "January is going to be very, very flat."
Throughout the country, shoppers were enticed out of their homes by big Boxing Day sales, with many shops offering wares at cost plus 5 per cent and discounts of up to 70 per cent.
One furniture store offered an Italian sofa for $2900 down from its original price of $7250.
Paymark, which processes three-quarters of electronic transactions in New Zealand, recorded a record $216 million in sales on Christmas Eve an increase of 19.2 per cent on last year.
It was also the first time $200 million had been spent in a single day.
