Zurich: Manor gives up location on Bahnhofstrasse

Manor has operated the department store at Bahnhofstrasse 75-79 for more than 35 years. "To our great regret - despite years of intensive efforts by Manor - all attempts to reach an agreement with the landlord to remain at the current location on Bahnhofstrasse in the longer term have failed. We are therefore forced to close our department store on January 31, 2020. Staying beyond this date would be fraught with too many legal uncertainties," Manor CEO Jérôme Gilg was quoted as saying in a statement.

The background is disputes with Swiss Life, which have been occupying the courts for years. Manor had a lease for the property on Bahnhofstrasse until 2014, when Swiss Life wanted to increase the rent from around six to 19 million.

Manor filed a lawsuit against this and was upheld by both the rental court and the Zurich High Court to the extent that the rent did not correspond to the "standard market contractual conditions for a department store". Swiss Life appealed this ruling to the Federal Supreme Court. According to media reports, five proceedings are currently still pending in the complex.

Swiss Life rejected purchase offer

According to Manor, one of the offers was to acquire the property at a price "in line with the market for Bahnhofstrasse". As it was said at a press conference, Manor wanted to pay CHF 535 million and has agreed to invest another 100 million in the property

Swiss Life stated that a sale of the property would run counter to its business strategy and that Manor's purchase offers were unrealistic. They did not take into account the unique location and the current market environment.

In a statement, the company finds clear words: "It is not Swiss Life's job to subsidize a group with our policyholders' money by foregoing a market-rate rent. We consider it our duty to generate a fair market return for our customers' money."

Manor seeks replacement location

Manor has not yet found a new location, but is still looking for one, according to the department store chain. They are looking for a location in the city center where a customer frequency of around six million per year can be achieved - as many as currently visit the department store on Bahnhofstrasse every year. Manor currently occupies 11,000 square meters of sales space. Although the company is open to smaller formats, CEO Gilg told the media that the minimum size would be 5,000 square meters.

Swiss Life wants to renovate the property on Bahnhofstrasse and realign its use; a building permit for this has already been issued: Retail units are planned for the first floor and the first basement and upper floors, while the upper floors are to be used as offices. There is talk of an investment of CHF 100 million and a construction period of two years. (ah)