News & Insights
The March quarter day signals another bare-knuckle round of pain for commercial tenants as more rent payments fall due.
Recent research by real estate consulting firm Remit, suggests around 50% of retail tenants will not be paying their rent this month. The majority have been ravaged by the effects of the relentless pandemic.
Retail and hospitality sectors had already been struggling, but more sectors have since been devastated by the virus.
The reality is that many tenants will default on their rent payments at some point this year and, at the time of writing, there is no indication of whether the moratoria will be replaced by an initiative that will continue to protect tenants past the end of June.
Unpaid rents will leave many landlord’s struggling too and, ultimately, tenants who find themselves unable to cover their rent payments may have limited options when highlighting this issue when rent is due.
The government Code of Practice for commercial property relationships during the pandemic is seen by many as ineffective and does not help tenants who are likely to lose protection in July. However, it does encourage the parties to communicate and is set to be reviewed later this year.
Many tenants will have already opened discussions with their landlords to establish whether they can come to a new arrangement.
Landlords may be happy to renegotiate terms if there is an upside for them too. There is growing evidence however that Landlord’s may be using the opportunity to rebalance their portfolios, particularly in the retail and hospitality sectors. Tenants who no longer meet the Landlord’s trends and expectations may find themselves with less options than those tenants who are more in favour.
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