Experienced business owners sat huddled around a table in London Fields Brewery last week to come up with a survival plan.
They’d made the short walk from their units under the arches in Helmsley Place and surrounding roads for a summit meeting to discuss Network Rail’s devastating rent demands.
The transport body has been sending out letters to its tenants over the last six months informing them of 200 per cent rent hikes.
For the industrial firms, that’s as good as closing them down.
To them, it’s like being told: “Thanks for all your hard work transforming this barren wasteland into a thriving trade hub – but we’ve got it from here.”
What’s more, if they don’t challenge the rent demands within 28 days, the rise is brought in automatically.
So on Tuesday, in a show of solidarity, bosses formed the London Fields Arches trade group. The idea is to share information about their individual negotiations and ensure no one is picked off.
And the Gazette was there to hear their stories.
“When we came no one would come around here,” said Quang Chu of Chu’s Garage. “It was drug dealers and prostitutes. If you walked down the road you would be looking behind you, even in the day! Now they want us out.”
Chu’s Garage is one of the businesses that would have no choice but to leave Hackney, and its customers, behind.
Derec Hickman, who is married to Quang’s daughter, continued: “We asked them if they understood a 200 per cent rise was the same as closing us down and begged them not to do it.
“We offered 20 per cent more but they have refused and keep threatening us with arbitration. They have never treated us like this before.”
The rail giant, which is part publicly owned, has 182 arches in Hackney and is one of the biggest commercial landlords in the country. But it is reportedly ready to offload its portfolio to raise much-needed funds.
One tactic being used is the offering of smaller rent increases for those with assured tenancies – if they give up that assurance and sign new three-year leases. Ominous.
Some London Fields traders have already left. Of 40 units, eight are vacant – but only one is on the market for rent. Network Rail says that’s because they’re set to be refurbished before being let out to independent firms, but traders believe chiefs are biding their time before selling.
To them, this is David v Goliath. What Network Rail argues is “market rate” is simply not. Hackney mayor Philip Glanville even wrote to chairman Sir Peter Hendy in December telling him to be more reasonable.
For traders who have been there years with a “light industrial” planning use, the average rent is £12 a square foot. The average overall is £18 a square foot.
But the water is somewhat muddied by the introduction of the cafes and restaurants, who can afford to pay more. One recently settled on rent of more than £50 a square foot, which Network Rail has apparently attempted to use as a yardstick.
Interestingly, despite threats of independent arbitrations to determine a fair rent, only once in the last six months has it happened. Derec believes this is because the arbitrator would settle on a significantly lower figure than the one quoted by Network Rail.
To be fair, Network Rail is one of the largest landlords of small and medium sized businesses in the UK, with less than 20 of its 4,000 plus London arches let to chains.
A spokeswoman told the Gazette negotiations were ongoing with six tenants to find an “amicable settlement”.
“We tailor our letting strategy to reflect the needs of the borough and look forward to meeting the mayor soon,” she said.
“We are obliged by the government to deliver value for the taxpayer and all the money generated by our estate is reinvested back into the railway.
“We aim to deliver value in the communities in which we operate, supporting a growing economy with businesses and jobs.”
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Case study: Ali Sharif
Ali has run Sharif Auto Services for six years. He currently pays £30,000 a year and has an assured tenancy but was told during a rent review Network Rail now wants £100,000.
“It’s completely unsustainable,” he said. “They want us out. I have five kids to support.
“We have two arches and we offered to give up one, but they said they want £60,000 just for one. And they want us to pay £40,000 to have them separated.”
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Case study: Hugo Ramos
The managing director of London Fields Brewery said: “When we came this was no man’s land. It gave us the opportunity to create a business and for the last seven years we’ve been part of Hackney. We started the craft beer revolution and London Fields wouldn’t be what it is today if it wasn’t for all these small businesses. The soul will be gone.”
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Case study: Charlie Fox
Charlie has been making furniture in London Fields for more than 25 years with his firm Poetstyle. He’s currently negotiating with two different owners over his railway arch and his warehouse space.
“They want a 250pc increase,” he said of Network Rail. “We were told about a month before Christmas, which was nice.
“I said I’ve already had a 2pc increase this year because of the terms of my lease and I think that’s enough.”
“The only chance to fight it is to all get together.”
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