Press: T2 joins store closures as retailers fight for life

Our Director, Phil Reichelt, was featured in an article in the Australian Financial Review by Larry Schlesinger, about how things are going in the commercial leasing space.

Here’s a summary of Phil’s interview:

“Retail tenant rep Philip Reichelt, who heads up Sydney-based Tenant Leasing Group, said most retailers were in “survival mode”.

“I use the word survival a lot,” Mr Reichelt said.

But, he said, most tenants and landlords were entering discussions with a “fair and reasonable” mindset.

“We haven’t dealt with any permanent closures or evictions – neither party wants to put the other out of business.”

“The success – or failure – of the new code would ultimately depend on landlords and tenants being able to come to an agreement, said Philip Reichelt of the Tenant Leasing Group.””

“It’s nice that it gives us guidelines, but it’s still up to tenants and landlords to be able to negotiate,” he said. “Hopefully, they’ll be prepared to treat each other fairly and honestly and with respect through the process. Only then will the outcome be favourable for both.”

You can read the the full text below:

The number of empty shops on suburban retail strips is on the rise as a growing number of retailers enter a period of COVID-19 hibernation or – in some cases – shut shops for good.

Upmarket tea retailer T2, owned by consumer goods giant Unilever, quietly closed all 70 of its Australian stores at the end of March “for at least four weeks”, according to a Facebook post. It joins the likes of Premier Investments, Accent and Lovisa, which have all shuttered their bricks-and-mortar businesses.

T2’s closed shop on King Street, in Sydney’s normally bustling Newtown. Rhett Wyman

Derek Muirhead, managing director of T2, said the retailer had long-standing partnerships with its store landlords.

“We’re currently talking with them about how we can navigate these difficult circumstances together. Clearly we’re operating in a challenging and unprecedented economic environment and it’s important that we work together to ensure we’re in a position to resume store trading when it is safe to do so,” Mr Muirhead said.

Some of T2’s stores, such as the one that traded for at least a decade on the corner of Church and King streets in usually bustling Newtown in Sydney’s inner west, closed recently and won’t reopen.

Former JLL Sydney agent Steven Tsang, who last sold the building in 2018 for $4.55 million, said King Street was full of “For Lease” signs because “crazy landlords were evicting tenants”.

A little further down the road, the former Dove and Lyre crystals and fossils shop stands empty and stripped of merchandise, though a notice in the window said it would reopen.

The store is up for rent, asking $450 a week.

“Yes it’s been closed for a while. Lack of customers,” said owner Di McGeary.

Retail leasing agents and tenant representatives told The Australian Financial Review there were no signs yet of mass permanent closures as tenants and landlords negotiate “in good faith” under the new code of conduct.

Fred Nucara, director of Aston Commercial, which manages more than 1000 retail tenancies, said his firm was dealing with hundreds of requests for rent relief.

Mostly, he said, tenants and landlords were showing a lot of goodwill to help ensure they both survived, but conceded that over time there would be some retailers who closed permanently.

He also criticised some of the national franchises for their initial approach of choosing not to pay rent without discussing their situation with their landlords or verifying their financial stress.

“For a national company not to pay rent, they need to show their turnover figures [to get the rent reduction]. They are not above the law.” he said.

LJ Hooker’s Anthony Romano, who is leasing one of the empty shops, said he was dealing with many rent relief requests.

‘Some shops are closing because they can’t make ends meet. Most landlords are open to negotiations under the new code,” he said.

Retail tenant rep Philip Reichelt, who heads up Sydney-based Tenant Leasing Group, said most retailers were in “survival mode”.

“I use the word survival a lot,” Mr Reichelt said.

But, he said, most tenants and landlords were entering discussions with a “fair and reasonable” mindset.

“We haven’t dealt with any permanent closures or evictions – neither party wants to put the other out of business.”