Retail Hire Collections Start to Improve

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Retail Rent Collections Begin to Increase

National retail rental collections are increasing after several months of declining collections. According to Datex Real estate solutionsIn the latest Tenant Track Report, retail rental collections hit 77.2% in July, up from 68.1% in June and 57.2% in May. The rise in rental income can be a sign that retailers are adjusting to new regulations and purchasing norms.

"There are a few variables driving the rise in retail collections from the April lows." Mark Sigal of Datex Property Solutions announces GlobeSt.com. “First, we have entered a phase of the 'new normal' where the categories of traders that required re-factoring or reconfiguration to accommodate social distancing protocols did just that to help these operators generate income to facilitate "oxygen" to pay rent. In this case, restaurants are better able to offer take-out and delivery services. In addition, beauty suppliers have better integrated online shopping with local pick-up.

Cities have also evolved, helping retailers adapt during the pandemic. "Cities have been partners in this process, which has made it easier for retailers to get permits for outdoor seating in restaurants (which often take over excess parking) or for outdoor haircutting in cities where hair salons are not considered essential," says Sigal. “As a result, slowly but surely, more retail categories in more parts of the country have shifted from closed to partial to full operation. In this case, the consumer will be better able to navigate this new reality. After all, the first wave of PPP lending was critical economic backing that kept numerous retailers in business that might otherwise have failed. "

National tenants continue to outperform mom and pop tenants. The national rental rent collections were 79.8% in July, while the overseas tenant collections were 74.6% in July. “Foreign tenants are doing pretty well. This is due to the fact that foreigners are by definition local and have therefore been able to make course corrections more quickly than nationals, who may have tens to hundreds of micro-markets that require certain operating strategies, ”says Sigal. "That means that the national tenants are catching up and have become more agile on the local markets."

In addition, national tenants have access to capital and stronger balance sheets to weather a storm like this pandemic. “National tenants as a whole have stronger budgets to weather the storm, although even that truth depends heavily on the category where, for example, 24-hour fitness went from multi-year rent of 99% + to bankruptcy in 90 days “Says Sigal. "Fitness and cinemas are severely affected by this dynamic in numerous markets."

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