Their shop was their retirement plan. But after two billionaires came to town, Adrian and Liz are walking away with nothing


imageWhen two of Australia’s richest men came to Pearcedale, locals didn’t realise what it would cost them

For many residents in the quiet township of Pearcedale, the local shops are the heart of the community.

On this weekday, the complex an hour’s drive south-east of Melbourne is beating strong.

Shoppers exchange cheerios across the car park and small talk about the impending rain as they bustle, car keys in hand, between the 13 shops.

Just down the road is the well-to-do bayside of the Mornington Peninsula, with its white beaches and luxury cars.

But Pearcedale is more working-class — situated at the very edge of Melbourne, close to Western Port, where small semi-rural holdings meet the mangroves.

Residents still refer to it as a country town.

Locals didn’t bat an eyelid when the owners of United Petroleum and two of Australia’s richest men — Avi Silver and Eddie Hirsch — bought the shops in 2015, under a company called Jasman Pty Ltd.

But now, they are concerned that transaction may cost them the heart of their town.

Three of the shops will close their doors for good today, with fears more will follow, after Hirsch and Silver hiked the rent substantially on some tenants.

The other businesses are still under existing lease agreements, protecting them from dramatic rent changes.

But many in the community fear when their leases run out, they too may have no choice but to leave.

“It’s just outrageous … [I’m] really worried about what this is going to do to the community,” long-term resident Janice Welker says with anger.

‘I couldn’t believe what they were asking’

Adrian and Liz Scialpi have run the hardware shop here for 21 years, building up a loyal customer base including farmers and boat builders.

Dozens of certificates of appreciation have been stuck on the wall above the entrance, thanking them for their donations to organisations such as the local school, CFA and pony club.

“I used to call on this little shop as a [sales] rep back in the late 90s,” Adrian remembers.

“When it came up for sale … I went home, and I said to Liz, ‘Do you want to buy a hardware store?’, and you know, her jaw hit the ground,” he laughs.

“What we did is we actually fell in love with this place, we fell in love with Pearcedale, we fell in love with the people and lifestyle of Pearcedale, and it’s just become our life now.”

The shop was their retirement plan.They hoped to rebrand it and work towards selling it, believing they could get a few hundred thousand dollars.

But they say things began to look shaky when their lease lapsed in 2019, and the owners wouldn’t sign a new agreement with them.

They were on a month-by-month arrangement, when in May this year their property agent emailed them a new leasing agreement.

“[I was in] disbelief.I couldn’t believe what they were asking,” Adrian says.

The landowners were tripling the rent — from $29,687 a year to $88,638 a year.

“So for my little store here, which is 180 square meters, in a country town, they’re asking me for nearly $100,000, in rental, [if you include] outgoings as well.So it’s a huge jump,” Adrian says.

A perusal of commercial rents show it’s substantially more than what other landlords are charging in nearby towns like Somerville and Hastings, where the population is double that of Pearcedale.

A similar-sized shop in Hastings, in a prize spot next to the local Kmart, was just rented for $68,540 a year.

It’s even cheaper to rent a similar-sized shop in one of Melbourne’s most desirable suburbs, with one retail spot currently available in Brighton for $55,000 a year.

“The little shopping strip here services purely just our local residents, so we have no passing traffic at all,” Adrian says.

“There’s a limited market of 3,000 people that live in town, and the rate of $500 per square meter, which is what they’re asking, is almost double the market value.”

The Scialpis admit they were on a good deal previously, and say they were willing to pay more.

They sought legal advice, and put in a counter proposal to increase the rent by 50 per cent, but it was rejected by the owners.

Moving isn’t an option, according to Adrian.The closest shopping centre in Somerville 10 minutes away already has a hardware store, while the next closest shops in Tooradin don’t have a property big enough.

The Scialpis will close the doors today for the final time, with losses they estimate at more than $300,000.Both Liz and Adrian will need to find other jobs.

“It’s just devastating.

I mean, we put our heart and soul into this place … to walk away under these circumstances, it’s pretty hard to take.”

‘We have to cut our losses and get out’

The Pearcedale Family Butcher is another business closing today.

The milk bar is going as well.

Sisters Julie, Cathy, and Leanne Morgan bought it as a general store 14 years ago, when it was still renting out videos and DVDs.

The movies are gone, but the lollies have stayed, as well as the ice creams, general goods and hot food in the bain-marie.

The after-school rush is the busiest time, with deals on drinks and chips offered during “happy hour”.

“We wanted the lolly stand to be a bit like the old-fashioned one where you go along and say ‘I’ll have some of them and some of them’,” explains Cathy.

“That’s what we grew up with as kids at our local milk bar and we wanted that feel for this place.”

Business has been up and down, and COVID hit particularly hard — especially when schoolkids and tradies stopped coming by.

They say they asked for rent relief over the phone, but were refused — despite the Victorian government instructing landlords to reduce the rent to help struggling tenants.

A spokesperson for Jasman Pty Ltd said there was no record of a request being made for rent relief and “no tenant who requested rent assistance pursuant to the Commercial Tenancy Relief Scheme was denied assistance”.

Regardless, the sisters say they paid all their rent owing.

They received an email in March, saying their rent would increase by 50 per cent, from $39,000 per year to $59,400 for their 120-square-metre shop

They made a counter offer of a 20 per cent increase, but it was rejected.

Cathy says there’s no way they could run a business paying that rent.They’re now left paying off the loan they took out to buy the business, without being able to sell.

“We have to cut our losses and get out, so it’s absolutely devastating.”

Cathy bristles when she’s told Eddie Hirsch and Avi Silver are estimated to be in the top 25 wealthiest people in Australia.

“Surely you can look after the little people during the tough times,” she says.

“You know, it’s unbelievable, isn’t it, that they have so much money, but they can’t support us during COVID … and post-COVID.”

Landlords have ‘every right’ to negotiate rent

Eddie Hirsch and Avi Silver are worth a combined $3.6 billion, according to The Australian newspaper’s 2021 rich list.

They made their fortune through United Petroleum, starting the company with a group of service stations in 1993, and slowly expanding to include hundreds of servos as well as fuel import terminals.

United is currently involved in a legal battle with several of its former service station franchisees, who say their agreements were unfairly terminated by the company.

They allege they’ve lost hundreds of thousands of dollars because of United’s treatment.

While Hirsch and Silver own the Pearcedale shops through their company Jasman Pty Ltd, they rent the shops out through United Petroleum.

Without commenting on this specific case, property barrister Robert Hay QC says once a commercial lease ends, the landlord can charge whatever they want.

“In the end, they’re in the same position really as if they were negotiating for a brand new lease — that is a lease where the tenant hasn’t already been in possession,” Mr Hay says.

In a statement, a spokesperson for Jasman Pty Ltd said it was seeking new leases in line with the rental market.

“As the rental the tenants enjoyed for [a] number of years was well below market rental rates, the tenants have decided to not take up new leases and leave the shopping centre,” the spokesperson said.

“Jasman has honoured a small number of historical leases with below-market rents for some years.

Jasman has every right to negotiate market rentals with its tenants as new leases are negotiated.”

But Alexi Boyd, from the Council of Small Business Organisations Australia, says the increases are unreasonable.

“I think it’s really disappointing to see a large company like this take advantage of a situation for small businesses where things are really difficult, we’re trying to get back up on our feet again, and then they get hit and slugged with this enormous rent increase,” Ms Boyd says.

“Often these shops are really an integral part of a small business community and part of the community as a whole.”

Several valuers the ABC spoke to said the owners would struggle to get new tenants in, while it would be tough for those who decided to stay to keep afloat.

The increases bucked the general trend of rents in and around Melbourne, which were flatlining as retail rental vacancies rose due to the pandemic.

“If the rent is that high no-one else is going to come in there as well,” one said.

‘It’s too late for us’

If Jasman Pty Ltd has a grand plan for the site, it’s unclear what it is.

One of the shops in the complex is a BP petrol station, which the departing shop keepers suspect will be turned into a United outlet once the current lease is up.

But it’s seeking long-term tenants in the now vacant shops, and has signed on other shops in the complex for multiple years.

The local council owns the car park, which carves out the centre of the complex, and says it has no plans to sell it.

Some real estate agents the ABC spoke to believed the company probably genuinely thought it could get someone to pay the increased price.

Others said it may be in their interest to have the shops empty but ask for a higher rent, because it made the price of the asset appear higher.

“Who knows,” says Alexi Boyd.

“It’s very difficult to know what is going through the minds of these big businesses when they make decisions like this.

“But the impact is stark.”

Whatever the reason, many locals in Pearcedale, including outgoing shop owner Cathy Morgan, fear the decision is the beginning of the end for the heart of their town.

“It’s too late for us … we can’t go on any further,” she says.

“Look after the small businesses that are left, because it means such so much to the local communities.”


– Reporting: [Jessica Longbottom] and [Eden Hynninen]

– Photography: [Danielle Bonica] and Michael Barnett

– Digital producer: [Kate Higgins] and [Joseph Dunstan]

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