The good folk at the ICSC have published what they believe is the first report of its kind into the disparities between the way service charges are put into effect across Europe. I know, it doesn’t sound like the sexiest topic in the world – but it’s an important one. The cost to retailers of service charges can be 20% of turnover, but are sometimes more, if the landlord is not considering the best way to bring them about. The retailer pays more than they should, it’s a difficult time in the market anyway, the retailer defaults – and the landlord is left with empty units.
And on that note – the report points out some fairly surprising discrepancies across European shopping centre managers. In some parts of the market, the costs of covering empty units are put onto the remaining tenants through increasing service charges – sounds like it would be a policy fairly vociferously argued against in the UK.
This is only one of a number of examples in a report that highlights the complexities – many of which are unnecessary. For retailers who operate cross border, and for shopping centre managers who own retail centres in more than one country in Europe, it is a difficult route to tread to understand what is done in which country.
The ICSC has made very (very) cautious noises about this report being the first step towards a European-wide code of practice on service charges. Increased certification for the industry can only help to improve the situation – talking to the BRC earlier, it admitted that the situation is much improved in the UK for its members since the RICS brought in the UK Code on service charges.
The ICSC is considering the results and looking for feedback, saying at the very least this report has “started the debate”. I hope they will take it to the next step and help to clarify the practice across Europe to prevent anybody being shortchanged or overcharged.
Read the full analysis here or go straight the ICSC report here
And I would also be keen to hear your feedback – good or bad practice from landlords or retailers.. Feel free to get in touch or email at hroxburgh@costar.co.uk
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