: Origin Espresso Cafe owner Glen Thorp said the 20% increase in rent was the last straw.

YOU SAID - Should shop landlords be able to charge whatever rent they choose?

Yes 35 (30%)
No 80 (70%)
Total 115

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Glen , 10-01-12 13:06:

Just a minor correction, it was actually 3 months free rent in total.
THanks for your support

anna whitfield, 10-01-12 10:42:

Thank you Glen, the actual reason is that you have outgrown the available space, that is a very good sign for your business. 3 months free for fit out, a shop that was previously fitted out for a cake/coffee shop and 3 months free makes it half rent over a year period, no rent for a third of your whole period there. Not a good investment for the landlord. We all like to complain about prices and unfairness, and you are right you can accept or decline, this article however is lacking in detail (did you try to negotiate with landlord, were you bound by a contract that kept you in a location that would not benefit your business). It is wonderful that you have outgrown your current business location but did not necessarily succumb to a hike in rent prices as the article states, but received free exposure that your business is moving. Well done.

Glen Thorp, 09-01-12 16:45:

Anna,
Not to sure where you are getting your information from.....we did have a short period of rent free (6 months exactly....3 of which were for fitout) when we opened intially back in 2010.
You will find it is quite common that most places are offering a rent free period on commercial leases in Port Douglas
We have enjoyed our time in our current location, although have outgrown it due to our wholesale expantion.
Point of the matter is, when given an option to renew u can accept or decline. In this situation it was in our best interests to decline the new lease.

anna whitfield, 08-01-12 02:11:

In the article it does not come across that Origin was offered a nearly rent free first year of operating and in that year was able to establish its name as one of the best coffee places in town - thank you to the operators of the business in its first year of operating and landlord for giving the opportunity. I believe in order to open the flood gate of commenting on the article, a better perspective of the situation should have been offered by The Newsport. I do not know the landlord nor do I know the speed of his driving. I do believe a lot is NOT right in the rent agreements for Port Douglas businesses to survive in these times, however in this situation there is more to the story then simply written in the article.

Jeff PD, 07-01-12 14:07:

James PD got it right. It is all about the bank's mortgage on a property that sets the Landlord's agenda. This is just like the Eurozone issue where no one wants to be the one who pockets any losses so the burden passes down the food chain. Unfortunately most tenants are very near the bottom of this food chain and have to wear the onerous burden of a contract clause agreed to in better times. I cop a 5% annual incease because the contract allows it and will cop it again next year and the year after and the year after. I agreed to it at the time as it offset even worse nasties that were being contemplated by the landlord and it would have worked in my favour if the declines in business over the last 18 months hadn't occured. It is unfortunate that the financial arrangements with the bank that we all have to operate under favours a landlord's balance sheet and not a good tenant.

James PD , 06-01-12 18:20:

If you want to see how dismal a situation like this can get if it snowballs just check out Airlie Beach mainstreet.

It has turned into a vicious cycle where new tenants wont take on a lease for fear of the local economy.

Property investors use commercial vacancy as a barometer for the future performance of residential real estate.

If landlords have an excessive number of vacant shops this can lead to very serious consequences for the area beyond simply a couple of empty shop windows.

If you google the "broken window" theory formulated after observing the slums of NYC you will see how one broken window unrepaired led to total lawlessness.

The Newsport Editor , 06-01-12 15:53:

Hi M. We approved that comment as we believe there were some good points within it. The reference to Mr Hall, in my opinion, was in jest and not intended to offend. Thanks for your thoughts.

M Goldberg, 06-01-12 15:16:

Not hugely impressed Newsport, allowing nameing and picking on a guy (regardless) is not that cool - just saying

M Goldberg, 06-01-12 15:12:

Don't most commerical leases involve set increases over the term of the contract ie CPI and the lengths of these contracts/leases generally last more than a year or 2?
Sounds to me like people are being offered a sweet deal to get them started and then have to pay more later. It's like the drug pusher, "just try it, first hit is free man!"

Simon , 06-01-12 14:45:

As Brett Hall gets older, everything seems to go slower, not to mention his driving!! The boys have done a world of good for Grant St. and now he pushes them away. By having the rent so high, and getting higher, the land lords are destroying this town. It would be great if the government could put a cap on what the landlords can charge their tennants. With the demographic of tourists coming to this town changing so much, we need to keep prices down, so the businesses can survive. Coles is the busiest place in town, as their landlord doesnt overcharge them. It would be great if other landlords didn't rip their tennants off too. Because empty shops don't look good for our town.And empty shops won't be good for landlords either.

Frank Frikker, 06-01-12 14:40:

15% up by market review! How can this be justified? Can Brett Hall prove that this is right? Rents are going down rather than up. Any partners doing business should in general aim at win/win situations for a long term success. Maybe there should be an upper ceiling for rent rises representing a limit that is economical & morally justifiable.

Richard , 06-01-12 13:07:

This is probably going off track a little but demonstrates that landlords will listen (and I might add, need to listen) to your concerns. The house we rent has had a white ant infestation in a vanity cupboard. Whilst the ants have been finally eradicated, today marks the 154th day since we reported the problem. We still can not use the vanity cupboards but a work order has been issued to repair/replace them. The totally unacceptable time frame for repairs led me to speak to the agent with regard to some sort of rent compensation because of the inconvenience caused. Whilst at times it was like pulling teeth in the end we did receive some rent relief which we were grateful for. The point being don't ever be afraid of opening the dialogue with your landlord....remember that you are the paying customer and actually have rights too!

Graeme , 05-01-12 20:16:

Ok tenants - I'm putting my accounting hat on - hopefully this helps. For any business to be sustainable in the long term you should be paying no more than between about 7% and 12% of turnover in Rent plus Outgoings. I know many national businesses that will not look at a location if the total rental (incl outgoings) is more than 10% of projected turnover. If you're paying more than this you are due for a rental DECREASE, not an increase. You should also structure your lease if possible so you pay lower amounts in the Green Season and higher in the Peak Season when your cashflows are better. The rent you pay should not have anything to do with the price the landlord paid for his property or his holding costs or his gearing or anything. Do your numbers, stick to the formula, and take your case to mediation / arbitration if necessary. If the numbers don't stack up and your moving costs aren't too high - do what Origin has been forced to do - leave. Look at all the empty shops in Macrossan Street - soneone will do a deal. By the way - did you know that Coles pays no rent at all - they meet their considerable outgoings but pay no rent until turnover hits a predetermined annual number. If they can do a deal so can you. Let's make PD vibrant again - vote with your feet. Viva la Revolution!!

James PD , 05-01-12 17:35:

As an ex real estate agent and current business owner I have seen both sides of this. The reality is that rent should be set as a reflection of the economic climate. Unfortunately, landlords often set rent based on their personal circumstances. Commercial property is valued based on the rent. If the rent drops, so does the assesable value of the property. If the landlord is highly leveraged he could face a situation where the banks will demand more money to be tipped into the mortgage. This is not the responsibility of the tenant and it is the tenants right to find a premises which offers suitable terms. I applaud Glen and Mark for the move they have made and know thet whereever they operate from they will be a success.

Glen , 05-01-12 16:06:

We had not intended to stay in this location for this long, but other negotiations with other landlords proved fruitless too.
Our new location provides us with much more room to grow.

tony , 05-01-12 15:06:

Landlords have to realise that if all rents go up and then your premisses will be empty..... a empty premisess doesn't make you money
the saying is the dog should not bite the hand that feeds it

Jenni Wright, 05-01-12 14:21:

Landlords need to stop being so greedy, small businesses are doing it hard enough, while you make the money these guys are losing, don't you want to keep your tenants? What your doing to pushing them out. Wake up and smell the roses!!!! Perhaps if you work with your Tenants everyone will come out on top!!

Benoni Henderson, 05-01-12 13:11:

Landlord must come to terms all his shops will be empty rather quickly with his current attitude. To raise rents in the current climate us suicide

James , 05-01-12 11:38:

Thankfully it isn't closing. Great coffee and service.Port is hardly flourishing and this sort of commercial direction could very well kill it off.With all the development planned here and Cairns is port at the crossroads!

Sandy Lee, 05-01-12 10:14:

These landlords remind me of a paralysis tick, they actually kill off the very thing that's keeping them alive!!

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Thursday 5 January 2012

Rent rise forces Origin's hand

Origin Espresso Cafe, the popular Grant Street coffee shop, is the latest Port Douglas business to succumb to a hike in rent prices.

Owners of the cafe, Glen Thorp and Mark Goldfinch, have been forced to make the decision to move premises, choosing the former Calypso cafe further down Grant Street where they will relocate to in a fortnight.

"We've been here for nearly 18 months," said Mr Thorp. "The lease was due for renewal and he (landlord Brett Hall) put the rent up 20%, 15% market review and 5% CPI.

"Once the rent went up that sealed the deal and gave us more motivation to actually find somewhere to move to for a long-term solution."

Mr Thorp questioned how a market review would result in an increase of 15%, saying that a decrease would be more appropriate. He added that he was aware of another nearby business who has been confronted with the same increase.

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Another business owner who wished to remain anonymous believes that landlords are "delusional" if they believe the Christmas to New Year tourism spike is a true reflection of the town's economic climate.

"We have an inflow of people for less than a week and all of a sudden everything is rosey in the eyes of the landlords. They don't understand that this period has to see us through until May at least."

Others have questioned the logic of landlords who face receiving no income for their premises if their tenant is forced to close its doors.

Karen Burchill from solicitors Bolt Burchill Tranter has lived in Port Douglas since 1986 and said that in her experience, those landlords who are more flexible with their lease agreements are more successful over a longer period of time.

"I act for a number of very nice landlords who haven't put up the rents for years and some of whom have dropped it.

"Now that's not widely indicative of what's happening in the area but then most of the landlords would rather have paying tenants than force them out of their premises and they're the landlords that I believe endure in this place."

Ms Burchill said that retail shop tenants have an avenue to dispute what they believe may be unfair lease conditions under the Retail Shop Leases Act through the Retail Shop Leases Tribunal.

She reinforced that once lease agreements are signed tenants enter into a binding contract.

The Newsport article 'Rent pain' (Monday 19 December, 2011) drew attention to the issue which drew a number of insightful comments from readers.

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