Allan Zeman calls for overhaul of retail tenant ratio
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Online sales are contributing to the struggles of the traditional retail industry as much as the slowing economy, Lan Kwai Fong Group chairman Allan Zeman says.
He said the trend led to the practice of landlords supporting food and beverage retailers with rents from other tenants, the Hong Kong Economic Journal reports.
As a result, rents have tripled for the latter, Zeman said.
He blamed the problem on a tenant ratio heavily skewed toward food and beverage tenants — seven for every three other types of retailers.
Zeman said the ratio should be reversed.
Zeman has launched LKF Capital, a private equity fund that invests in lifestyle, entertainment and food and beverage brands.
Meanwhile, he said investors should not be overly concerned about China’s policies, saying these are mostly meant to maintain stability.
Zeman is frequently invited by Chinese cities to share his experience in turning Lan Kwai Fong, a once rundown pocket of Central, into a success story.
Questions & Answers
Q.What specifically is causing the current struggles in the traditional retail industry, according to Allan Zeman?
What specifically is causing the current struggles in the traditional retail industry, according to Allan Zeman?
Allan Zeman states that both online sales and the slowing economy are contributing to the difficulties faced by traditional retail businesses. This dual pressure is impacting their operations significantly.
Q.How has the practice of landlords supporting food and beverage retailers impacted other tenants?
How has the practice of landlords supporting food and beverage retailers impacted other tenants?
Landlords have been using rents from other types of tenants to support food and beverage retailers. This practice has led to a significant increase, tripling the rents for these non-food and beverage tenants.
Q.What tenant ratio does Allan Zeman believe is problematic and what does he suggest instead?
What tenant ratio does Allan Zeman believe is problematic and what does he suggest instead?
Allan Zeman identifies a problematic tenant ratio of seven food and beverage retailers for every three other types of businesses. He suggests this ratio should be reversed to address current market imbalances.
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