Commentary: Review could store up trouble

Campaigners for a change in the system of setting retail rents look to have been given some powerful ammunition by a study of the latest round of reviews at Brent Cross and Metrocentre, two of Britain's largest and most profitable shopping centres.

Hillier Parker and Price Waterhouse were commissioned by Boots the Chemist to review trading and forecasts of retailers at the centres. Their conclusion was that, in aggregate, the shops would have made trading losses for the whole five-year review period. Shop costs would have increased by 68 per cent at Brent Cross and 46 per cent at Metrocentre, at a time when retail sales were falling.

The research persuaded the landlords to modify their claims - and David Stathers of Boots believes it helped them to do far better than they would have at arbitration. But the research, released yesterday, says it still leaves the retailers with trading losses.

Mr Stathers argues that shopping centres need a different system of rent reviews from high-street stores. The units are all owned by the same landlord, all the reviews are simultaneous and, because vacancies are infrequent, it is generally possible to find new tenants at the prevailing rent. That makes it easier for landlords to resist pressure to consider external factors - such as a slump in the economy - when negotiating reviews.

The problem with his trading-based system is that all the retailers in a centre must co-operate. And it could work against them: would they have been happy to give landlords trading information at the last review in 1987, when the economy was powering to ever-greater heights?