Commercial property rentals – what is really at play?

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While researching the state of the commercial property rental market in Hermanus, I stumbled across the story on Facebook about the demise of Mock Turtle, a once-thriving nightclub and dance bar, which was forced into closure due to a string of circumstances. While the story left me somewhat dumbfounded, it stuck in the back of my mind as I listened to tenants and landlords giving their views on the current state of the commercial property market.

As is often the case, when business is tough and people are struggling to keep their doors open, the emotions and sensitivities are at a peak and anything that threatens a business’s viability becomes a challenging conversation between tenants and landlords. What has been highlighted by the conversations I have had, is that there are more than just two players involved. Reading the Mock Turtle story is a must for anyone trying to get to grips with the status of this market and its impact on local businesses.

One consistent message I received is that unless the tenant-landlord relationship is one of partnership and collaboration, there will continue to be dissatisfaction when times get tough. There also appears to be a distinct difference between the relationship with a “corporate” landlord/managing agent versus a private landlord, who manages the relationship with the tenant directly and not via a managing agent.

The two main issues are the duration of a commercial lease and the annual increases that are applied. There are many arguments in favour of both the landlord and the tenant’s viewpoints, but it is apparent that unless there is flexibility in the rules that apply, both parties could come off second best when a dispute over either of these issues arises.

There are landlords who are willing to negotiate with existing tenants who need to downscale their premises in order to survive. There are also those who refuse to consider any flexibility and would, therefore, lose the tenant and sit with an unoccupied space, similar to what is happening at the higher end of the residential rental market. What is really of concern to many is the other factors that are impacting on businesses’ budgets and survival.

A classic example is that of some companies who moved out of the CBD, at quite some expense, to avoid the impact of the planned upgrades and re-establish themselves elsewhere, only to see delays in the upgrades which to this day are anyone’s guess as to what will happen and when. It is all good and well to blame the opening of the Whale Coast Mall on most of the CBD’s woes but it does go way beyond that when differentiating between a large retail chain brand and a small business entrepreneur who wouldn’t be able to afford those rentals anyway.

The net result is a catch-22. The CBD looks lonely and set adrift by day and by night, with the exception of a few areas populated by eateries, art galleries and bars. There is nothing inviting for visitors as they enter town after Gateway Centre and the closer one gets to town, the less appealing it looks. Both landlords and tenants are frustrated as both are impacted by circumstances that they do not necessarily have control over and each blames the other for their respective woes.

When times are tough, the smallest of issues can become exaggerated out of all proportion, whereas during the good times, they are hardly noticed. So whilst conversations of survival are key to sustain the needs of both landlords and tenants, there are times when both parties simply will not agree because of the emotions at play.

The Mock Turtle story (search for the name on Facebook and scroll down to the post) adds another dimension to the conversation and, whilst every story has two sides (or in this case a lot more), one has to wonder to what extent the approval processes for business licences or rezoning play a role in the challenges being faced by business owners and landlords, as delays of this nature affect both parties. If it can happen to an establishment like Mock Turtle, it could happen to any business that is trying its utmost to survive but gets stifled by red tape and procrastination.

Then there is the old guard who, despite the realities of the world, do not get it that progress is inevitable and nothing anyone does is going to change that. So, yearning for the “good old days” when Hermanus was just a holiday town becomes a pointless exercise when a larger percentage of the local population is striving to bring more tourists into town, which will bring growth and change with it anyway.

One can only hope that collaboration and communication between tenants and landlords brings about a better solution for all and that regulatory and approval processes are supportive of business entrepreneurship rather than a noose around its neck.

Read the Facebook post from the owners of Mock Turtle below

How Hermanus Municipality and Big Business is Killing our Town.The inside story of what has happened to the Mock…

Posted by Mock Turtle on Wednesday, 11 September 2019

Mock Turtle
11 September ·
How Hermanus Municipality and Big Business is Killing our Town.

The inside story of what has happened to the Mock Turtle.
(A bit of a read, but I feel it is time to share the shocking backstory.)

It is just after 3am and I cannot sleep. I have been rolling around in bed for the last hour trying to convince my brain that it needs to calm down and give my body a rest.
No luck, so I get up and aimlessly walk through my dark house. In 3 hours I have to start my day and I know it will be another stressful one.

This is how it has been going every night for the last year. By now I know that it is stress that is keeping me up.

I’ve read articles on sleep deprivation and, to my dismay, have learned that sleeping 4 hours a night combined with constant stress may very likely kill me.
Great! Another thing to worry about – a small, dark thought creeps in and for a moment I think: “Well, if that happens at least I will finally get some rest and my worries will be a thing of the past.”
With shock I realise that a part of me actually relishes the idea of death, of leaving my suffering behind. I quickly stop this train of thought. I cannot think like this.

I have a husband and 2 small children – I have to be there to protect and take care of them, to guide them through this broken world.

This is my story. This is how I came to be where I am now.

In 2008 we moved to Hermanus from Sun City Resort where I grew up. My husband (then fiancée) had a job offer at the Arabella Hotel and I had decided to start my own business.

My family has a long history with Hermanus that spans many generations. This is where we had our family holidays, where my mother conceived me, where I had my first kiss, where I started married life and bore my children. It is the final resting place of my brother and grandparents. It is also where we’ve all planned to retire eventually.

In June 2015 I bought Shimmi’s nightclub, which was located in Hermanus Village Square Mall.
It was a beautiful little nightclub, which had been operating for almost 15 years.

As I have worked in hospitality and events my whole career, it was the perfect thing to add to my business. I loved it from the first moment and put everything I had into creating a phenomenal venue and guest experience.

We changed the name to Mock Turtle and also started opening during the day as an eatery and cocktail bar. We were doing great, becoming the most popular party spot in Hermanus. We hosted year-end parties and private functions for multinational businesses, building an impressive following. We had international visitors and celebrities that visited us year on year. In 2018 we were extensively featured in multiple episodes of MTV’s reality TV show, The Challenge.

In 2016, a year after buying Shimmi’s, everything started changing. Village Square was sold and the new owners had other plans for the mall. They wanted to turn the top floor into a hotel with guest apartments and made a deal with a well-known hotel group in town. One by one the businesses in the mall started closing their doors as their leases were being cancelled and their shops turned into guest rooms.

In 2018 they started building guest rooms (with dry wall!) right next to Mock Turtle – something that worried us greatly, as we knew this was going to cause problems for us.

On 3 December 2018 those units next to us opened (without even being fire & safety compliant or approved by all local authorities). From then on we received noise complaints almost every day – mostly because of activity inside and outside of the mall – people making a noise in the public parking lot and streets etc.

I had many meetings with mall management, my argument being that there will always be noise complaints from those rooms regardless of our being there or not, as it was not built correctly or ideally located. Today we are no longer there, and the noise complaints from their guests continue, so now they just reply with “It is the CBD, and the area is always busy and noisy”. You just have to read the online reviews for those guest units to see for yourself.

Regardless, between the mall and the hotel group they hatched a nefarious plan to give us the boot. Using made up allegations against us, trying to force us out of the venue (and we were not the only ones – just ask some of the previous tenants who have gone through the same thing).

Fortunately I had all the evidence (written, photo & video), which we’ve collected over many months, proving that they were not truthful. So off I went to see my lawyer. I had a good case and would even be able to prove that their legal statements made under oath were false and full of mistakes.

When I met with the mall to discuss my concerns they basically told me: “We are big and you are small, we will drown you in legal fees and sink you.” Telling me that their loyalty lay with the big hotel group, not with the small businesses that lease from them; that they want to change the image of the mall and don’t want “those” kind of people (our patrons) in the mall any longer.

Do they even care that “those” people were some of their own clients, hotel guests, golfing groups, high rollers, celebrities and artists, not even to mention our very own locals who’ve also supported the other businesses in the mall?

My lawyer advised me that we can fight their case and will most likely win, however, he advised against it as he had dealt with a similar case with them before. In the end they will just appeal the outcome and drown us in legal fees.

Thus, in January 2019 we gave up and went searching for a new venue to move to – not an easy feat if you run an entertainment venue which comes with extensive licencing and special zoning permission.

I was lucky to find a new venue nearby, located in the middle of the CBD. I did not just blindly take the first place I found – before I signed our lease I visited Town Planning, the Municipality & the other powers that be. I wanted to hear from them if they thought the area and venue would be suitable for Mock Turtle. If it was worth investing the last money I had in the move and saving my employees’ jobs.

It was confirmed that it would work well, as it was in the middle of all the other bars and pubs in town. It would also fit in with the municipality’s old-town renewal plans, as the area is to become a new tourist hotspot and due to our popularity we would draw new feet to the area.

We were so excited! The premises were already business zoned, and I only needed to put in an application for special zoning permission to run a place of entertainment. After this I went to see Plan Active, who would assist me with the zoning permission application process (at great expense), as I had no idea how the process works.

I was worried about not being able to trade for the time that it was estimated the zoning permission process would require. Paying salaries and rent without income for months is not something anyone can afford, so I asked our local Designated Liquor Officer what we could do with regards to trade in the interim.

I was advised that I can apply for a temporary event liquor licence, as zoning permission is not applicable with such a licence. We could thus bridge the municipal waiting period and open for trade on weekends and some holidays – just a few days of trade per month to carry us financially until the municipality and town planning had finalised their process.

I informed all the authorities of our plans going forward and signed the lease at the end of January. I submitted and paid all our applications and in March we started a costly R200 000 refurb in the venue (after we had received our building plans from the architects).

We made sure our fire & safety compliance was in order, received our population certificate from the municipality and our event liquor licence was approved. At the end of March we were ready and opened our doors for business on Saturday, 23 March 2019.

We had a wonderful soft opening that was well attended. Everyone was excited to see the new venue. We had no idea what disaster was heading for us next…

The very week after our opening we received a complaint from a lady that operated an unlicensed B&B nearby, without the knowledge or permission of the municipality. She was furious that we dared open a place of entertainment near her business, stating that Mock Turtle was operating illegally (she never even came in to verify our compliance documents, which are displayed on our wall as required by law). She laid a complaint with the local authorities, saying we were operating without a liquor licence (which of course was false).

Hypocritical much???

The biggest shock for me was when other business owners and employees came to see me after this and informed me that she had gone around to everyone in the area, asking them to complain about us so that we could be shut down because us being there was going to lower everyone’s property values.

I have come to accept that she is just one of those miserable humans that will always be unhappy and have problems with others. She is not well liked in town either as she has made problems for other businesses as well, from what I have been told. Sadly, she does have supporters here, because in this town, like all others, we also have quite a few trolls who think they own the town and want to prescribe to everyone else what they can and can’t do.

Regardless of our right to operate, we were informed by Town Planning that we need to get a costly impact survey done and could not trade until this is completed – we had to do this to satisfy the authorities that this lady’s complaint was baseless.

So we had to close our doors again right after Easter weekend for this. The survey was done and we passed with flying colours. In June we opened for trade again, after being closed for 2 months.

By now it was winter and Hermanus was out of season. Trade is slow at that time of year. I was also running out of funds from carrying a non-operational business for months. On the 1st of July I had to close my doors again and let all my employees go, as I realised that I will not be able to keep financing the business until town planning and the municipality finished with their zoning permission.

We had gone through the costly zoning application; we followed the prescribed rules and made the necessary changes that were required of us. In April we were asked to immediately pay R4 070 to the municipality to place our notice of application in the newspaper as they wanted it placed that same week – I paid the amount on the Monday so that it could be placed that week.

The notice ended up just sitting on a municipal desk for a whole month before it was placed, stretching out the waiting period even further.

Finally we had our comment period in May, after which the last commentary had to come from the municipality. It is now September and we are still waiting for the municipality to get their final paperwork done. I keep phoning and following up on progress.

For the last month, all they can say is that they are waiting for one person at the municipality to confirm that we have enough parking bays (even though we have 2 huge public parking lots right in front of our premises and Town Planning and the Liquor Authority had already confirmed we had enough parking).

Sadly, due to this turn of events, Mock Turtle will be closing permanently next week. I wish that I could have continued the Mock Turtle legacy, but I simply don’t have the funds to trade anymore.

I have given my cooperation with everything, doing all that was requested of me. Smiling and always polite, I accepted what came my way, even though I was breaking inside. Unfortunately this town has a clique that does not support change. They want growth, but they expect everything to stay the same.

Today I decided NO MORE! It is time that something is said and I am hoping that everyone will share the hell out of this post.

People need to start speaking up and making themselves heard. As long as we are stuck with this municipality and the handful of spiteful Hermanus residents, Hermanus will just keep on sinking its own citizens.

WE NEED CHANGE! We need people who will put the welfare of our town and its people first, and not only think of personal gain. We cannot afford to continue being run by and prescribed to by bigots and people that clearly do not do the work they are being paid for.

Just look at our town – closed shops on every street and in every mall. Wondering what the unemployment stats for Hermanus are these days.

This whole drawn-out process has unfortunately also completely bankrupted me. I am losing a successful business that took 12 years to build. My losses are in the millions.

I had to eventually sell my car, my wedding ring, clothes and everything I possibly could to pay my bills. I have lost my medical aid, my savings and may even lose my house in the next few months.

My 7-year-old son has Aspergers and has to go for regular occupational therapy, which is now no longer covered by medical aid, thus he cannot attend sessions. Neither will I be able to get the much-needed knee operation to fix an injury that has been paining me for months.

My family is living from hand to mouth these days. In an effort to keep food on the table for my kids I have actually started skipping meals myself, only having something every other day. Thinking of the 15 Hermanus locals who’ve also lost their livelihoods due to this just breaks my heart. They also have families and kids who are now paying the price.

I am thus ending this chapter of my life, and hoping to make a new beginning elsewhere.

Lastly, I have to mention the people that made this nightmare a little bit easier.

• My employees. Thank you for your loyalty and the excellent service that you provided over the years. For sticking by me and sharing in the dream we had for Mock Turtle. I wish you all the happiness in the world.

• David Williams from Barnies. Thank you for helping me build my dream and supporting me when I was at breaking point. You are a giant amongst men and the most loyal person I know. The world will be a better place if there were more people that had your integrity and compassion.

• My landlord, Brigitte Sabbe. You have been an amazing source of support and have stuck with me through the whole process, at huge risk to your own business. I wish that we could have worked together longer, as I think we see the world in much the same way. I also hope that you light a huge fire under our lackadaisical municipal staff’s butts to get them moving. I know you also have other tenants who are struggling to open businesses due to the municipality not handling applications in a timeous manner.

• Fabio from Tosca’s, who always had a friendly word to share and kept us fed during the long refurb hours.

• Linda & Ria at Coastal Trusses, where I still have one last refurb bill outstanding – thank you for your patience and the compassion you have shown to another suffering business in town.

• And to all you party animals who’ve supported us over the years and during this almost year-long waiting game – it has been real. We have made crazy memories and we had great fun while it lasted. Our FB page will stay up as a reminder of all the good times we had at Mock’s, as well as the damage that a poorly-run state entity can cause to a well-run business.

*** For the next week I am opening the venue for private viewings as I need to find a new tenant.
The venue is a beautiful piece of art, and I am hoping to find someone that is willing to take it over as is.

All trade equipment will put up for sale to try and cover my losses and pay my last bills, however, I will give the new tenant first option to buy everything, should they wish to open a restaurant, coffee shop, pub & grill or such – that at least we are zoned for.

Interested parties are welcome to contact me directly.