In the wake of the Covid-19 restrictions that have seen retail shopping traffic decimated, there has been a lot of debate, and argument, about who should bear the brunt of falling sales in shopping malls.
The argument from the centre operators (landlords) is that rents should be fixed, regardless of fluctuations in retailer’s sales. The retailers, on the other hand, say that rents should be proportional to reflect changing conditions. Proportional rents are those tied to sales, so that in good times retailers pay more, in dollar terms, and in tough times they pay less. Paying less when there are few, if any, in-store customers means that at least they can stay open and ride out the lack of patronage. A shuttered retail store benefits no-one.