Needed: consensus

Wola Park is one of the largest shopping centres in Poland. Although Warsovians do go and shop there it is having problems with its own tenants who have complained about the high rents and a low footfall. Can the owners and tenants reach an understanding?

The tenants of Wola Park have been in dispute with its owners, Wola Park, for several weeks now. After protesting against the high level of rents by refusing to pay them in full, their landlord subjected them to power cuts.

MagiCorp out
"When we were signing our lease agreement we were promised the moon. We were to be in an elegant building of the highest standard with numerous attractions." The speaker, from one of Wola Park's tenants, didn't not want his identity to be revealed for fear of aggravating relations with the owner any further. "We were shown a portfolio according to which the leisure section had already found an operator, but in fact it is still standing empty."
The owners of Wola Park did, indeed, negotiate a major deal with a Canadian leisure centre operator, MagiCorp, but the latter finally opted out and signed a contract with another Warsaw retail and leisure centre, Blue City. "I am sorry, but I cannot comment on any other sites in Warsaw which we may or may not have considered at any time. We are very happy indeed with our relationship at Blue City and are looking forward to opening Poland's most exciting and versatile Entertainment Village in the Spring of 2004," said Tita Gonzalez of the MagiCorp Group.
Alas, despite numerous attempts, Eurobuild did not get to meet Wola Park representatives. However, Tony Pinnell of the Board of Directors assured us in a letter that, "in the near future, different operators will open a Family Entertainment Centre and a fitness centre at Wola Park. These operators will act to replace the operators previously contractually committed to occupying and operating these amenities but failed to do so before Wola Park's grand opening. The opening of these entertainment and recreational facilities also represents a significant investment on the part of Wola Park and the new operators, to providing a source of entertainment and recreation for the benefit of Wola Park's visitors and tenants alike."
The owners of Wola Park did not say anything about prospective cinema tenants.

Turnover, payments and proposals
Wola Park tenants must have been disappointed at the absence of a leisure centre operator, although they claim that the business was going well at the beginning at least. "In September and October the novelty factor drew in customers, and November and December are generally the busiest months in retail but this doesn't alter the fact that there were fewer customers here than in other centres where the same shops had turnovers 40-50 per cent higher despite significantly lower rents." Tenants of medium size retail units pay EUR 40 to 60 sqm.
In view of the low turnovers and the fact that the complex wasn't entirely finished when launched, tenants filed a request to lower rents by 50 per cent until the end of June 2003. They claim that they understand the investor's difficulties in finding tenants and believe that by the end of the first half of this year, the dilemma will be resolved so that rents can return to their contractual rate.

Association and negotiations
Last December, some tenants in small and medium-sized units decided to establish an association to represent their interests in their dealings with Wola Park. Though it originally had 80 members, a number of them later dropped out but finally, the Wola Park Tenants' Association was formed in February this year.
Its members who, by the end of last year, became conscious of the ineffectiveness of negotiations with Wola Park began to pay only fifty per cent of their rents, though continued to pay in full for their electricity, water and marketing. The owners' reaction wasn't difficult to predict. First, they threatened the tenants with power cuts, and then, began to summon them to individual meetings and try and persuade them to sign agreements and withdraw from the association (more details in the boxes). A number of the protesters, exasperated by the dispute, succumbed and signed new, slightly more advantageous contracts. Those who continued to make a stand, had their electricity cut off for over ten hours. Now however, that the protest has been joined by larger tenants, (who until now have ignored the action), the members of the association are increasingly confident. "It emerged that they had a rent-free period until the end of the year so our dispute didn't concern them," said our anonymous tenant.

Rent is not the issue
"I cannot comment on the rent-free period, though it's true that we did consider joining the association", says Sławomir Misiak of Rossmann's Expansion Department. "Frankly speaking, we are not too happy about the way this centre is managed. It is not advertised around the city, it has no entertainment section which would draw clientele, and a decent restaurant is also hard to come by here. This takes its toll on the popularity of the centre. There has recently been a change of management however and we want to give the new people a chance. They've shown us some interesting marketing ideas and we're waiting for the results."
Sławomir Misiak does not however regard the level of rent as a cause for complaint, as he sees it as comparable to other shopping centres around Warsaw.

No ceasefire
Although the signed contracts contain a clause stating that the dispute is over, neither the tenants nor the owners are thinking of laying down their weapons just yet. The association plans to turn to the Court of Arbitration at the Chamber of Commerce in a move to settle the dispute. Wola Park's owner, on the other hand, is demanding over PLN 3.3 mln "by way of compensation for the damage to revenue caused by an act of unfair competition".