Will Retail Rents Ever Return to Pre-Pandemic Ranges?

0
47
Will Retail Rents Ever Return to Pre-Pandemic Levels?

Retail rental collections have grown steadily in recent months after falling off a cliff in March when the pandemic broke out. In July rental income reached a pandemic peak of 77.2% according to research Datex. However, this may not be a steady increase to pre-pandemic collection levels. Instead, rental collections could decrease before returning to pre-pandemic levels.

"The big unknown in all of this is whether this is as good as it gets until we have a vaccine, or worse, we start relapsing, and there are two pretty binary answers to that question." Mark Sigal, CEO at Datex, tells GlobeSt.com. “The pessimistic view is that with a few many retailers and so many retail landlords affected economically and emotionally by the first wave of COVID-19, we are entering a phase where unfavorable numbers of infections can occur and consumer spending caution, a macroeconomic one Economic slowdown and massive job losses leave a consumer unable to spend and a vicious circle develops. Add to this the federal government's inability not to politicize the next wave of PPP loans, and it's easy to paint some dark scenarios. "

Of course, there is also a more optimistic view. If a vaccine becomes available, confidence could be restored quickly and the economy will slide back. "The more optimistic view is that with a viable vaccine on the horizon, retailers and landlords have better days ahead and continue to work together to move from an otherwise rocky phase to a more stable one," says Sigal. "In other words, if you've made it this far, don't give up now. Add that this is an election year and the government will do what the governments will do in the election years, which is to put money into the economy, to do to stop any weakness. "

Additional waves of infection are the biggest problem for retail rent collection and retail recovery. "One risk is that mask wearing and social distancing will continue to be politicized by the government, leading to a surge in infections, forcing more closings and economically killing retailers in the fall," Sigal says. "Second, the government is unable to approve the next wave of PPP loans that will deprive retailers of the oxygen they need and lead to the demise of small businesses, resulting in more layoffs and weaker consumer spending."

LEAVE A REPLY

Please enter your comment!
Please enter your name here