Massive discounts: 30% lower rent in Liberty Center

With traffic amounting to 60% of expected levels, owners of the Liberty Center mall in Bucharest decided to cut the retailers’ rent in order for them to survive the weak sales. Rent paid by the around 100 tenants of the Liberty Center mall, held by Mivan Development and the Awdi family was cut “across the board” by 30% in spring, after the number of visitors, as well as sales fell below the owners’ expectations, as voiced at the time of the opening, in late October of 2008. The mall has had a new manager since April, 50 year-old British-born Mike Pugh, after the owners decided to terminate the contract with Cushman & Wakefield, which had been the project manager up until that point. “As early as April, when I came here, I scheduled interviews with all tenants. After it became apparent how difficult the retailers’ situation was, we decided, with consent from the owners and the banks, to cut rents by 30%. The measure is reviewed on a quarterly basis and now, in July, we will probably decide to keep the level of rent the unchanged until the end of this year,” Mike Pugh told ZF. According to statements made by Liberty Center managers at the time of the opening, rent amounted to 30 euros/square metre/month. The 30% cut would result in the average monthly rent falling to 21 euros/square metre, while annual revenues would be down by around 2.5 million euros. Liberty Center’s manager did not confirm the new average rent charged in the mall.