36pc rent increase just takes the biscuit

CBD cookie bar owner says landlord’s ‘market value’ rise will force her to close.

The owner of a tiny cookie bar with a cult following claims she will be pushed out of business by a rise in rents.

Moustache Milk and Cookie Bar in Auckland's CBD was set up by 23-year-old Deanna Yang in 2012.

But two years into a seven-year lease, the shop that sells cookies, milk and coffee faces a 36 per cent rent increase - taking it to $56,080 a year, or $1650 per sq m - which its landlord says is based on market value.

Ms Yang said such an increase would likely lead her to bankruptcy. She has set up a petition on the Change.org website to save the shop, which yesterday had 3256 signatures.

"It basically means we have no choice but to shut our doors. It's seriously just unsustainable to pay that increase in our rent and it seems almost impossible for the market value to have gone up that much in such a short amount of time," she said.

She had seen about five nearby shops shut down within six months and she saw the shop next door being advertised for rent on Trade Me for less than they were proposing to charge her.

"They were telling me that the market rate was nearly 40 per cent more than [what] I was paying, yet they were trying to lease out the property next door to me for cheaper."

She said that shop had double the amount of frontage and was 10sq m bigger than her 34sq m shop.

According to Colliers International market reports, the low end of the range of prime rents in Auckland CBD was $1500 per sq m in 2014, unchanged since 2009.

Mark Vanderham of JNJ Management, the company that held the lease for the Auckland Council-owned Civic Theatre building, said the increase was based on rentals being achieved for similar premises in the strip of shops it rented out on Wellesley St.

"There are two others that are on Wellesley St and I've also based it on two others that are on Queen St," he said.

Some of the leases were new and some of them were for existing tenants that had been around for at least a year. There was not necessarily a higher turnover of tenancies in the shops he managed than other parts of Queen St, he said.

Kensington Swan partner Matthew Ockleston, who specialises in property law, said a market rental assessment would normally be based on other leases in the area.

He said Ms Yang's lease allowed either party to specify what they thought the current market rent was and either party had the right to challenge it, which would lead to arbitration or both getting in a valuer.

If a dispute ended in arbitration, it could be costly for Ms Yang, without guarantee of success, he said.

Sometimes landlords chose not to increase rent at review time as it could be easier to keep tenants on rather than facing a long vacancy.

"It comes down to a bit of a commercial decision by the landlord."

A council spokesman said JNJ Management had a 40-year lease on the shops.