Retail landlords bow to tenants' wishes in weak market

Having quality tenants is better than getting higher rents.

Gone are the days when retail landlords fully called the shots when it comes to dictating rents. Flagging sales, diminishing footfalls and intense retail competition mean that tenants now have the upper hand in the local retail scene.

According to CIMB, landlords will have to accept flat or even negative rental growth in order to retain or attract quality tenants that will draw shopper traffic and sales.

For instance, restaurants tend to draw crowds and spending, but usually pay lower fixed rents and higher gross turnover (GTO) as compared to fashion choices.

"We think that further increase in occupancy cost is unsustainable, and lower occupancy cost has to come
from either improved tenant sales or lower rent," said CIMB.