Rental growth and pricing valuation benchmarks are the biggest challenges facing the retail sector over the next 12 months, according to Colliers International Retail Landlord Sentiment Survey. The findings of the survey found that just over half of all landlords (52%) have 60% or less of their tenants currently trading, with 70% of landlords expecting vacancy to increase over the next 12 months.
According to the results of Colliers’ survey, 72% of landlords have reported that 45% or more of their tenants have applied for rent relief or rent holidays, with half of all landlords surveyed offering a mixture of rent holiday and deferral. As more stores are opening every week it is a good first indication of retail recovery. The majority of those surveyed owned retail assets in Victoria, New South Wales and Queensland.
Michael Bate – Head of Retail at Colliers International said “While these survey results reflect the challenges Landlords are experiencing from COVID-19, we are seeing both tenants and landlords reach a mutually beneficial solution. Many retail stakeholders are adapting to market changes by adopting new strategies to support a COVIDSafe economy”
Unsurprisingly, the report found cafes, restaurants and beauty sectors have been hit the hardest by the social distancing rules implemented by the government to combat the spread of COVID-19. Subsequently, these sectors have been the most prominent when requesting rental relief.
‘What has been interesting is the clothing and footwear sector, which although was not mandated to shutdown, saw a significant proportion of major retailers close their stores, accounting for a significant proportion of tenants requesting rent relief. Our retail market analysis shows that over 7,000 clothing and footwear stores have voluntary closed their stores during the pandemic period.” said Bate.
The Retail Landlord Sentiment Survey aims to provide ‘real time’ information about sentiment in the Australian retail market.