Disputes over rents rise slow businesses in malls

NAIROBI, KENYA: Mall developers struggling for footfall, attracting new tenants and saddled by expensive marketing strategies are in for tougher times as unrest rises among current occupants to add onto their troubles.

Tenants at the Point-Mall in Buru Buru have vowed to close their shops for two days, to protest high rents as businesses struggle in lean times.

Ms Florence Kiema of the Pointe' Bistro says they have witnessed lower foot traffic partly blamed on charging higher prices as a result of paying higher rent.

"At 40,000 we can manage to pay the rent, our staff, bills as well as the bank loans comfortably," Ms Kiema who says she pays about Sh80,000 said.

The Mall's operating manager Mr Paul Kilonzo however says this is part of a growing trend where tenants are rallying behind agitators to arm twist owners to bring down rent.

Mr Kilonzo said that he had reduced rents twice in 2015 and last year but with an understanding that the rates would be bumped up this year.

"A unit is about Sh50, 000 which we reduced after they complained that business was slow, I think they are coming out to complain because we agreed that the rates will be revised up this April," Mr Kilonzo said.

The situation at the point is telling how the promise of sprouting malls to reap big from a ballooning middle class is leaving a bitter taste in the mouth of businesses, realtors and banks that financed them.

Some store owners are struggling to pay rent delaying on their monthly obligations while others have gone failing to pay up until their premises have been locked.

Most of the agencies that run the malls protect themselves with a six month deposit and a clause charging between 5 and 10 per cent on delayed payments meaning some of their tenants have accumulated huge penalties.

Some of the tenants at the Point even claimed that the agency in charge, Tranquility Holdings, does not give back their deposits when they up and go, a charge Mr Kilonzo refused.

"The terms are there, signed between me and my people on an individual's basis, if there is a broken window somewhere, if they delayed paying the rent, the penalties are outlined and they have signed," Mr Kilonzo said.

The developers and their realtors argue that they cannot reduce prices since they incur additional costs of marketing and support infrastructure which they do not pass on to their tenants.

Realtors are already being squeezed by new tenants who are asking for discounted rates, reduced service charge against a demand to scrap goodwill, hire interior designers to spruce up the buildings, set up indoor entertainment spots and offer freebies.