Jobs threatened as Spanish independent retailers face 1,000% rent hike

LAST UPDATED: 17 Nov, 2014 @ 12:18
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Jobs threatened as Spanish independent retailers face 1,000% rent hike

INDEPENDENT retailers could soon be forced to shut up shop when a 30-year-old agreement of below-market-rate rents ends next year.

The rental scheme – which has shielded retailers since 1985 – ends in January 2015 and could see retailers’ rent rise by up to 1,000%, according to self-employed workers and professionals body UPTA.

Industry experts have said 100,000 stores, bars and restaurants are ‘at risk of closure’ resulting in thousands of job losses.

Property expert Miguel Angel Sanchez Fraile said the agreement had ‘distorted the true market value’ which had in turn allowed for independent retailers to thrive.

He added: “There used to be a demand to rent commercial outlets and now there isn’t.”

“There is still a climate of worry in this recovery that hasn’t quite found its feet, although things are starting to get better in city centres.”

Standalone retailers with less than 10 members of staff employ 4.2 million people in Spain, making up 40% of the private sector workforce.

Industry experts are predicting the change in rental agreements could result in up to 10% of private workers losing their jobs.

Unemployment levels in Spain stand at 20% with the economy slowly recovering from the economic crisis.

11 COMMENTS

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  1. In my experience here in Fuengirola the businesses which have thse types of rental deals are the ones that are living in the past. I know several bars that have this kind of deal and all are out touch with the market place and only survive because of the low rent. In most case these businesses are run very poorly and havent changed with the times so be it a hardware store or bar or a restaurant they havent changed while a lot of the time been located in a prime spot. Most have been in families for years and employ only family members while get away with shutting for siestas, holidays, fiestas and of course every Monday (in he case of bars and restaurants). I for one don’t shut my bar on fiestas or any day of the week and operate it as a 7 day a week 365 day a year business which gives people work and generates tax. I have had my business here for 12 years and have constant employed staff while trying to move forward with the times changing along the way. Two examples of places with these sorts of contracts would be a clothes shop which can be found behind the post office in the centre of town which is stuck in he middle of all these modern tapas bars in a busy area, to be frank it’s an eye sore and only survives because of the low rent. If this shop shut it would reopen as something more modern and suitable to area no doubt generating more work/tax Another would be the large Hardware store in Los Boliches that still refuses to change although it’s business its suffering at the hands of AKI for the last 5 years but still has the same stock as it did no doubt 30 years ago. Add this to 100’s of poorly run small bars and restaurants that in the hands of a younger generation would move forward rather than stay stuck in a time warp.

    Of course there will be a few that will suffer but from what I know of my town this will only make things better as a lot of the outdated places are forced to go.

  2. I’ve already seen evidence of this. Lots of shops shutting down in some towns, and all in the same blocks, which implies a rental charge change across the board from the landlord. Looks like Spain’s recession is far from over.

  3. Yes it seems that it is already happening which should level the playing field up for those who are paying the market rate for their buisness. The other side of the coin which isn’t touched upon in this article is if you have for example 4 bars in a row and one is paying a lot less than the others (in some cases 10 times less) he can then set his prices lower as his overheads are next to nothing which could put the other 3 bars out of buisness losing 3 times as many workers their jobs as it would be putting rent up in the odd one out.

    Running a buisness is hard enough and normally in Spain a large % of buisnesses survive only because they are lucky not to get inspections (labour/hacienda/health) or are breaking the law. Spain is nightmare place to have a small buisness but IMO it’s not usually the strongest that survive but those who are most connected or lucky

  4. Forcing people to modernise and move with the times is one thing but I still believe that half a cake is better than none. despite what the Spanish finance minister might say a lot of Spain is still in a parlous state. In my village there used to be three hairdressers now there are none, anybody know a ribbon supplier.

  5. As an example, In Murcia, building is taking off at the moment in some areas. You can see more cranes actually moving if you visit. More buildings are now finished and also sold to all European nationalities. Businesses are opening and if they’re paying say 800 euros rent a month, I doubt, as this article infers, they’ll end up paying 96 THOUSAND euros a year RENT. WHAT.

  6. 2 people I know personally who have these type of rental contracts are resigned to the changes. Each have locales which they pay around 100€ euros a month for which is shockingly low. One of these owners has actually been sub letting his bar to a foreigner couple for over 6 years for 1500€ a month which is too high, he expects his rent to rise to about 800€ a month.

    @peter
    Yes it is a shame businesses are shutting like the 3 hairdressers where you live, however this often the greed of inflexible landlords who for years have been putting their rents up often pricing out local people. The prefect tenant before the crisis was a foreigner who think the rent is cheap, pay some sort of figure to take the local on then go out of buisness a few months later,then repeat.
    A friend of mine rented a real estate office for over 5 years for his spanish landlord, the crisis hit and he wasn’t making sales so ask the landlord to drop the rent and he would stay another 6 months. Of course the landlord refused and actually put rent up as was in my friends contract. Anyway my friend walked away and that local has been empty now for 4 years.

  7. Talking to my spanish waiter last night he said that nearly 50% of all family ran bars, restaurants and small businesses in Fuengirola that had been here for over 20 years had this sort of contract. I imagine that once this new law comes in there will be some major changes to the scenery

  8. In Spain the large shopping Centres will eventually wipe out the small shops, they are about 35 years behind the UK but I have seen this start to happen over there. Also, many years ago, people would go to the pub a lot, but now prices are a lot more expensive and health issues are better known of I think there is a culture change regarding alcohol. In an average run down bar I have been to on the coast in Spain they charge almost as much for a Spanish brandy as you can buy the 70cl bottle for. One plaza near my coastal place has roughly 50 units there, I think that 7 must be occupied. Maybe it is the exchange rate or prices have gone up but many years ago I did not even think about the money I would spend with going to restaurants in Spain, it was so cheap to go out. I am earning the same sort of money so it is not that I have less money.

  9. The online shopping will take off when they sort out the post system, I have a business and home address and maybe get 50% of my post and less sent from overseas. My house is on an urbanization which means I have one address for my house and another for my letter box which is stuck behind a security gate with a buzzer that has never worked. I. Would love to buy from companies like Amazon but if that means queuing up in the post office for 45 mins forget it and that’s the times i would actually recieve a notification

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