A new row has broken out between retailers and developer Westfield, this time with retailers alleging that the Australian developer is unfairly withholding promised contributions to store fit-outs.

The developer has infuriated tenants by deducting substantial sums from the payments to fund higher-than-expected service charges.
The contributions to fit-out, paid as part of the incentive package to attract tenants into the centre, run into hundreds of thousands of pounds and were due for payment 10 days after the centre opened.

But retailers spoken to by Retail Week said as much as 20 per cent had been held back, to cover the service charge for the pre-launch period and the first two months of opening.

“They’ve deducted a lot of things we thought we’d paid for,” said one retailer, who added: “The level of administration with a Westfield opening is four to five times that you have with any other centre.”

It is unusual for a service charge to be demanded for the period before a centre opens. Services such as waste removal, security and toilet facilities are included in the charges, but retailers are annoyed because they said security had been poor and theft a major problem.
Westfield confirmed that so-called “completion statements” have been sent to retailers with charges applicable both pre-opening and until the end of this year deducted from the contributions to fit-out.

However, a spokesman for the developer said it was open to negotiation with its tenants. “We are more than willing to talk in reasonable terms,” he said. “We’re not holding a gun to anyone’s head.”

He said that the issue had only reached a head with a handful of retailers, but admitted that relationships with the centre’s tenants hadn’t gone as smoothly as expected.

“There’s no doubt that people have been upset about things,” he said. “We’re doing our best to talk to them and sort things out.”
The debate is separate to that over next year’s service charge, which has also angered retailers since it came in much higher than they had believed it would be.