Retailers struggled to pay rent due to the pandemic, and as a result, the retail market was among the sectors with the lowest rental collections in commercial real estate. In June, a third of retail renters had paid 75% of the rent, and that number doubled in July, with two-thirds of retailers paying just 65% of the rent, according to a retail survey conducted by NRF and PJ Solomon.
The low rental collections aren't surprising considering so many retailers were forced to shut down during the pandemic. At the height of the pandemic, 73% of retailers had to close their doors during the pandemic, including locations in malls and malls.
As the rent back builds up, most retail tenants have already reached an agreement with landlords to repay the accrued rental debt. In fact, only 10% of NRF and PJ Solomon respondents had not yet reached an agreement with landlords on rent repayment. On the flip side, 73% of retailers said they wanted to repay at least half of the rent back, and 50% of retailers said they had received some form of rent relief from landlords.
While the retail rental collections are low, some data outputs have shown stronger rental collections today than at the start of the pandemic. Datex Property Solutions found that retail rental collections rose 68.8% in mid-July, up 14.7% from mid-June and an increase of 36.6% from mid-May. Partial reopening measures have helped boost rents in some markets. In addition, retail deals with landlords have helped increase rental payments.
On the other side of the table, landlords also believe retailers should get help from the pandemic. According to the NRF and PJ Solomon survey, 67% of respondents said retailers who have seen the economic impact of the pandemic should receive assistance for three months. Additionally, property owners believe that lease distribution programs should help protect tenants from credit loss problems.
However, it was clear to the owners that assistance programs should be reserved for tenants who are financially stricken by the pandemic and tenants who may have an impact, including closed shops, layoffs and vacation days. Half of the respondents agreed that this should be a basis for the rental support programs.
The size of a retail tenant also plays a role in rent relief. For example, earlier in the pandemic, NewMark Merrill Co. said it was focusing on give support rather to small mom and pop tenants than to large loan tenants who have access to the capital markets. The retail investor has more than $ 2 billion in net worth in California, Colorado, and Illinois and prefers smaller renters because he has only had so much relief.