Is there an impending change to the rental business model?

Currently, rental costs makes up 50% or more of retail business costs. Most retailers complain that this is unfair. Landlords appear to do nothing and just collect rental while retailers are struggling to make ends meet. Hence, the call to change the rental business model.

Some retailers are suggesting that tenants should be charged a share of their revenue instead of a fixed rental every month. But this may result in landlords being choosy about their tenants and many retailers won’t even get a chance of getting a shop lot.

On the other hand, tenants should also consider the high capital costs of landlords which oblige high rental. Landlords have loans to service as well. At the end of the day, water will find its own level. It is simply a case of demand versus supply. If retailers don’t find it attractive to rent, rental rates will definitely fall when the supply outstrips demand. I think we should not artificially impose practices on landlords/tenants. Instead, we should just let the market sort itself out naturally.

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