PRN: Spotlight Falls on Retail Service Charges for new Report Into Cost and Compliance
Spotlight Falls on Retail Service Charges for new Report Into Cost and Compliance
BRISTOL, England, November 29, 2011 /PRNewswire/ --
The KTP partnership between Kingston University and Property Solutions (UK) Ltd is launching its second piece of industry research into service charges - this time focusing on the UK retail shopping centre sector - SCOR for Retail (Service Charge Operating Report) will be published on 30 November 2011.
The research was conducted between August and October 2011 and includes analysis of service charge expenditure from 2007 - 2011 performed on 70 of the top 100 largest UK shopping centres. The report estimates the annual service charge spend for this sector to be in the region of Â£3.4 billion. Information on service charge costs will be published - the average service charge cost in UK shopping centres was found to be Â£4.67 per square foot representing a significant range of Â£1.08 per sq. ft. to Â£9.13 per sq. ft.
SCOR also looked to identify any patterns between service charge costs and floor space occupied, however no correlation between the two was found suggesting that in retail service charges, economies of scale are surprisingly absent.
Shopping centre size was also not an indicator for the level of cost charged. For example, it was found that shopping centres of similar size (between 1.4 and 1.9 million sq. ft.) impose service charges ranging from Â£3.50 per square foot up to Â£8.00 per square foot. Depending on the size of the retail occupier, this variation in total service charge expenditure could have a significant impact on operational profitability.
Summary of additional SCOR for Retail results:
- Only 42 documents from the sample, which is less than a half, contained both cost classes and categories as suggested by the Code
- Marketing costs average approximately 6.11% of total service charge costs
- Only 37.1% credited interest to the benefit of the occupiers. A further 11.4% of certificates did include a figure for 'other income' or 'income' as a separate item on the certificate but failed to disclose details about the source or nature of this income
Commenting on SCOR for Retail, industry performance analyst for the KTP and co-author of the report, Anastasia Zatolokina said: "The report is designed to offer the property industry much needed, detailed benchmarking intelligence of service charge costs as well as guidance on best practice as set out by the RICS Code."