The Polish Association of Retail and Service Employers (ZPPHiU) points out that there is still a lack of transparency in the settlement of common costs in shopping centers. It is common practice for service charges to rise drastically—far beyond the inflation rate—without tenants being clearly informed about what these charges include or the reasons behind the increases.
This issue is systemic. Landlords should estimate costs and, as professionals, bear the risk of proper budgeting—providing tenants with a single fee that includes both expenses and the profits of shopping center owners. The current situation leads to uncontrolled, drastic cost increases and gives shopping center managers no motivation for professional and responsible financial management. It is neither in the interest nor within the competence of tenants to audit the expenditures related to maintaining shopping centers—yet, due to sudden increases in fees, they are forced to do so.
Landlords Refuse Independent Audits Despite the Code of Good Practices
Surprisingly, many shopping center managers refuse to allow tenants to audit common costs through independent auditors—even though such a right is guaranteed, for example, in the Code of Good Practices of the Polish Council of Shopping Centers (PRCH). The Code states that landlords should grant tenants access to relevant financial documentation.
A notable example occurred last year at CH Sfera in Bielsko-Biała, a case described by ZPPHiU in a letter to PRCH. An appeal for fair cooperation standards, sent on November 19, 2024, received no response.
*”Chapter IV.2 of the Code of Good Practices states that transparency is a fundamental principle, granting tenants the right to audit the costs incurred by the property owner or manager for maintaining the premises. Transparency is recognized as a key element of the Code. PRCH representatives have repeatedly stated publicly that tenants can conduct audits based on source documents provided by landlords, and that the specifics of these audits are determined in the lease agreements. Therefore, a landlord’s refusal to allow an audit is not only a breach of binding lease agreements—harming tenants—but also a violation of the Code of Good Practices, which PRCH developed in cooperation with tenant representatives. It also contradicts the public statements of PRCH representatives.
In Galeria SFERA, whose practices inspired our letter to PRCH, good standards outlined in the Code of Good Practices should be followed rigorously, especially since the shopping center is managed by a PRCH member—CBRE GI. Furthermore, Galeria SFERA was even awarded the title of ‘Master of Good Practices’ in the 12th edition of the PRCH Retail Award, as advertised on its website.
Unfortunately, this case is just the tip of the iceberg. Our organization has received reports of audits being hindered or outright blocked at other shopping centers as well—raising serious concerns about the integrity of financial settlements in these locations. This issue is particularly significant in shopping centers where service charge advances—reaching exorbitant amounts—continue to rise unchecked.
We hope that landlords will not continue to act in blatant contradiction to their own Code of Good Practices and that PRCH will take steps to resolve this contentious situation. We have requested PRCH’s intervention, yet we have received no response.” — Zofia Morbiato, General Director of ZPPHiU
“Green Lease” Clauses Shift Costs onto Tenants
Due to provisions imposed by landlords in so-called green lease annexes in shopping center contracts, there is a growing risk that even more costs will be transferred from landlords to tenants—an additional and unjustified burden.
Landlords are demanding that stores replace high-quality flooring, storefronts, and installations—harming the environment without adding any value for customers. These irrational requirements, especially when introduced after financial negotiations are completed, extend the lease negotiation process and increase tenants’ costs. There is still no clear presentation of expected cost savings or a transparent policy on planned pro-environmental initiatives in shopping centers.
Often, landlords carry out common area renovations without informing tenants, later including these costs in service charges without consulting the business partners who contribute to the success of shopping centers.
Parking Fees and Hidden Costs
A similar lack of transparency applies to parking fees. Tenants cover parking costs through service charges, expecting that customers will have at least two hours of free parking while shopping. However, shopping center managers continue reducing free parking time, and additional revenues from parking fees are not included in common cost settlements, effectively becoming an extra source of profit for property owners.
Systemic Issues in Shopping Center Management
Existing shopping centers require continuous investment—both due to aging infrastructure and new standards introduced by evolving EU regulations. However, legal obligations related to real estate—whether concerning safety or regulatory compliance—fall on property owners, not tenants. Despite this, landlords attempt to shift their responsibilities onto tenants, who have long called for a minimum level of business partnership, particularly regarding fair risk-sharing in lease agreements.
Addressing Tenant Concerns at the ZPPHiU and PSNPH Congress
These issues were thoroughly discussed at the 3rd Congress of ZPPHiU and PSNPH, where experts outlined risks and proposed solutions to protect tenants. The main topic was “green lease agreements” and how thoughtful negotiation strategies and comprehensive cost control can help reduce investment costs.
For the first time, research findings were presented on actual consumer expectations for shopping centers, along with the introduction of a new tool for evaluating customer experience—both at the shopping center level and individual retail stores.
Source: Manager Plus
