Struggling retailers are tightening the thumbscrews on developers in the wake of the global financial crisis. In Turkey, where the local lira has dropped against both the US dollar and the euro, developers are being forced to give discounts of up to 20%.
Struggling retailers are tightening the thumbscrews on developers in the wake of the global financial crisis. In Turkey, where the local lira has dropped against both the US dollar and the euro, developers are being forced to give discounts of up to 20%.
'Some local retailers with euro-based leasing contracts are having trouble,' concedes Glenn Aaronson, CEO of retail developer Multi Corporation. 'We are offering tenants in our new centres marketing contributions of up to 20%, but on average they range between 4% and 10% per centre.'
He declined to put a figure to the costs, but said they would not run into the millions. 'It's not a lot of money.' He added that the 'marketing contributions' are being offered only in five or six new centres such as Forum Trabzon where a one-day tenants' strike was held in September. 'We're talking about the smaller local stores, not the international retailers. Some tenants are being hit twice at the moment, by the financial crisis and the ordinary start-up costs that you always have when you open a new store. But our more established centres that have been around for a couple of years are fine.'
But market watchers expect international retailers will also be hit by falling local currencies and consumer spending. 'Food chains will not be hurt to the same extent as electronics concerns and other stores. But there will be some pain in the long run,' one source who preferred to remain anonymous said.
Aaronson said Multi Turkmall was offering the marketing contributions for a rolling six-month period with a view to improving footfall. In September, another major Dutch investor/developer Corio announced it had abandoned its $1 bn plan to build shopping malls in Turkey due to excessive demands from retailers. The local Milliyet newspaper paper quoted Corio Turkey chief executive Koray Ozgul as saying that the company had stopped its plans to open shopping malls in eight Turkish cities in Anatolia.
Multi Turkmall is the biggest developer in Turkey and has opened six new shopping centres in the last two years.
