80% of retailers in rent arrears with landlord – Retail Excellence
80% of retailers are in rent arrears with at least one landlord, a new survey by industry representative body Retail Excellence has revealed.
The research also found that in one fifth of rent arrears cases, the retailer claimed there had been no engagement whatsoever from their landlord.
“This survey provides a useful indication of what is happening in the market at present, as retailers struggle to get back on their feet after the body-blow of enforced closures due to the pandemic,” said Duncan Graham, Managing Director of Retail Excellence.
“We welcome any engagement from landlords on rent arrears, and as such it is concerning to see one in five respondents say landlords are not engaging with them on rent due and are demanding full payment despite the fact that stores were shut for nine months.”
The study of 145 retailers with a total of 1,650 outlets between them revealed a particular sticking point with large landlords.
Two thirds of those who are in a situation of arrears, where there has not been an appropriate resolution, are renting space from institutional landlords and shopping centres, the poll found.
“Deals are being done across the board but in general, it seems it is the smaller, local landlords that are being reasonable and willing to compromise,” Mr Graham said.
“Whereas in comparison, the majority of problem cases from this survey refer to bigger landlords.”
Of those tenants who have been able to secure concessions from their landlords, the most common resolution offered has been a 50% discount on the rent due during periods of closure.
Deferred payment plans have also been offered in many such cases.
Mr Graham said, “We have seen really good deals done”, referring to the landlord at Dublin city’s George’s Street Arcade who waived rents during closures.
He said, “It is a major concern and we are quietly seeing over 2000 stores pull down their shutters, potentially for good over the last 18 months as a result of the pandemic”.
Mr Graham said with non-essential retail back trading since May some landlords may be holding back until retailers generate some cash before they come “looking for their portion of it”.
He said the lack of engagement from larger landlords needs to be urgently addressed.
Last October the Government urged commercial landlords to show forbearance to tenants who could not meet their obligations under their leases because of the financial pressures caused by the pandemic.
It also published a voluntary code of conduct on commercial rents that had been agreed between landlords and business representatives.
The code set out principles of engagement which both landlord and tenants should commit to abide by in order to prevent disputes arising during the pandemic.
It suggested that full or partial rent-free periods, a split in the cost of the rent between landlord and tenant and rent reductions to a current market rate and/or a proportion of turnover should be considered where tenants cannot pay in full.
However, it was only to remain in place until the end of July of this year.