“In a big city you’ve got 50 000 landlords to choose from; even in a small town you’ve got 200 to choose from. That’s a free market operation. You’ve got freedom of association, freedom of choice. But now let’s say you’re a small black trader and you want to get into Tyger Valley [Shopping Centre in Cape Town], you’ve got one landlord, they’ve got absolute power. You’ve got a privatised city.”
So eager are shopping mall developers to sign up anchor tenants -- the large national chain stores that pull shoppers to the centre -- that they are given 20-year to 30-year leases, often with minimum escalation of rent and as little as 1% or 2% turnover rental. The mall owner then tries to extract as much rent as possible from the small tenants in order to fulfil his return on investment. Small tenants, especially the flourishing ones, are sometimes charged as much as 15% turnover rental and are given leases as short as three years.
Full story on M&G