COVID 19 has put retail property into fast-forward – fundamental changes (such as the move to online) that were afoot prior to March 2020 have been accelerated. As one commentator put it ‘2030 has turned into 2020.’ There will need to be widespread fundamental change in the way we approach leasing and now more than ever landlords and occupiers will need to work together in partnership.

In the shorter term however our experiences during lockdown have mainly seen us negotiating with landlords and tenants on a constantly shifting playing field. From a tenant perspective, with shops largely closed and income turned off it’s been about survival. From a landlord perspective it’s about trying to work with tenants to maintain some income whilst ensuring properties remain occupied. Discussions have involved the following, with each case unique and presenting its own challenges:

  1. Monthly rents: as a minimum, occupiers are seeking monthly rental payments (as opposed to quarterly) to assist cash flow.
  2. Rent deferral: to further ease cash flow, rent deferrals are being negotiated. This is normally in the form of the March 2020 quarter’s rent being deferred, until January 2021 and repaid over monthly or quarterly installments over a pre-agreed period from that date.
  3. Rent holidays: in some cases 3 months rent free has been agreed in return for adding 3 months to the end of the lease term.

Of course, there is government assistance for occupiers which we bear in mind in each instance. This includes 100% rate relief on ‘occupied’ retail property until April 2021, grants of up to £25,000 for each qualifying property with a rateable value of under £51,000, and the availability of business bounce back loans and staff furlough scheme.

On a personal level here at Black Stanniland, whilst flexible working including working from home is not a new concept to us, we have tried to battle the onset of lockdown fever with a combination of regular exercise (PE with Joe Wicks, cycling, walking), and the occasional Zoom virtual drinks/pub quiz/card game!

The retail landscape will rapidly change further in the coming months, as the restrictions now start to ease, and there will be much discussion over the June 2020 quarter’s rents, and also potential for lease re-gear negotiations. What is clear is that both landlords and tenants will need to adapt so these challenges, which are likely to be with us for some time, can be overcome’.