How is the retail crisis affecting commercial landlords?

Landlords are feeling the effects of the retail crisis as shops close and retailers demand cheaper rent.

According to analysis by PricewaterhouseCoopers (PwC) and the Local Data Company (LDC), during the first half of 2019, 16 stores closed their doors every day, with only 9 new ones opening. This has resulted in a net decline of 1,234 chain stores on Britain’s high streets.

Just a few of the big chain stores that have gone into administration so far this year include Karen Millen, Jack Wills, Debenhams and Patisserie Valerie.

Other struggling stores including Homebase, New Look and Monsoon have been forced to close stores and request cuts in their rent bills to try to save themselves from insolvency.

A combination of competition from online retailers, high costs and high levels of debt are causing many retailers to put pressure on landlords to slash their rent bills.

Commercial landlords up and down the country are signing legal agreements with their retailers to reduce rent to avoid being faced with empty units.

It’s not just the retailers facing CVAs that are requesting rent cuts though. Many other retailers that don’t appear to be at any immediate risk of insolvency are putting pressure on their landlord to provide rent reductions to keep their rates competitive.

According to the Financial Times, rent prices agreed in UK shopping centres in the first half of 2019 dropped by one third when compared with last year. In some of the worst affected areas they dropped by 40 – 60% in just three months.

It’s clear that high street retailers and landlords both rely on each other for their financial success, so it’s important that they work together during this financially challenging time to support each other and strike fair deals.

If you’re a commercial landlord with a tenant who has fallen into commercial rent arrears, get in touch with our team of professionals for advice on how to deal with the situation and help collecting what you are owed.