The recently over-stated CPIX figures will give rise to pressures on the
pricing of leases says Rodney Luntz of property consultancy, Abro Luntz.
CPIX is one of the key elements used to calculate escalations and landlords
would be hard-pressed to dispute that escalations have been set at higher
levels than necessary, based upon the 2% error in the CPIX figures.
As a result of this misstatement and the current over supply in the market,
tenants are in the bargaining seat in negotiations with landlords keen to
secure steady rental income streams from quality tenants.
However tenants locked into long term leases are less fortunate he says.
They are tied into lease agreements which were negotiated when CPIX was at
the higher levels, hence their escalations and even perhaps their rentals
are higher than if they had negotiated their rentals now.
Notwithstanding a binding lease agreement however, a lease is built on the
relationship between the landlord and tenant. Landlords therefore now had a
real opportunity to build on this relationship by lowering their escalation
rates in line with CPIX.
An analogy was the way the rand had strengthened recently - retailers who
had passed this strength on to their customers by way of lower prices had
enhanced their relationships with their customers.
New tenants were still in a win-win situation and the maxim "seize the day"
applied.
Publisher: Cape Business News
Source: Cape Business News
Capitalise on CPIX mis-reportage.
Posted On Monday, 11 August 2003 02:00 Published by eProperty News
The recently over-stated CPIX figures will give rise to pressures on the pricing of leases says Rodney Luntz of property consultancy, Abro Luntz.
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