Swedish Trade warns: The extreme rent increases of over 20 percent in recent years have hit trading companies hard. Empty shop premises are becoming an increasingly common sight in cities and shopping centres around the country. New figures from Swedish Trade's Rent Database show that up to a quarter of a store's turnover goes to rent. This historically high percentage is not changed by the more normal CPI figure of 1.6 percent that Statistics Norway presented today.
Photo: Dreamstime.
The new figures show that there are geographical differences in how much of the turnover is rent. Stockholm, Gothenburg and Malmö stand out, but also cities such as Karlstad and Uppsala. It is above all smaller shops that have been hit the hardest when rents have been shock increased, in combination with other increased costs, and that consumption has decreased as a result of the recession.
The situation is still particularly vulnerable to the clothing trade, which is often the sub-sector that forms the core of the cities. In Stockholm, the rent makes up an average of 24 percent of the turnover for these stores. In Gothenburg and Malmö the figure is 19 and 16 percent respectively, which are levels far above what these companies can bear.
'For several years, we have warned about the development we are now unfortunately forced to witness. More and more shop premises are empty. In addition to job opportunities disappearing, it is a severe blow to local communities around Sweden. We have reached a point where well-visited stores are replaced by empty showrooms for foreign car brands. It risks being a death blow for living city centres,' says Martin Kits, head of Business Policy and Opinion Formation at Swedish Trade and continues: 'The property owners are responsible for the answer regarding how our cities and city centres will be experienced if large parts of the trade are eliminated.'
He adds: 'Interest in Swedish Handels Rental Database grows with each passing year. The number of reporting units has grown by approximately 11 percent since last year's survey, and the Rental Database now has a coverage rate of 20 percent in terms of the number of chain-operated consumer goods stores in Sweden. Going forward, there is also a hope to be able to include the grocery trade and the hospitality industry. The rental database is a powerful tool. In black and white, we can present an accurate picture of what the rental situation looks like in Sweden. The rental database also clearly highlights the rent supplement's share of the total rental cost. The biggest news this year is that we can break down the figures for both the city and the shopping centre. Something that has long been seen as an unattainable dream by our members.'
Time for the government to act - a new investigation is needed
The shock rent increases of recent years have already meant that otherwise prosperous shops have been forced to close. Swedish Trade therefore repeats the demand that a government inquiry be appointed to evaluate today's model for rent indexation. With today's model, the market rent system risks being put out of action.
'The fact that the cost increase is now falling makes no difference to the traders, whose rent remains at the high level that the recent years' increase of 20 percent has led to. This is despite the fact that the property owners' actual costs are falling. The industry, and society, need to be better equipped the next time we see a sharp increase in inflation, and therefore the government must now appoint an investigation to create a more stable rental market,' says Martin Kits.
More information:
Svensk Handel
www.svenskhandel.se