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No eviction guarantee for retailers

David Jones will review store portfolio

The Prime Minister, Scott Morrison announced yesterday, the National Cabinet agreed to a moratorium on evictions over the next six months for commercial and residential tenancies in financial distress who are unable to meet their commitments due to the impact of coronavirus (Covid-19).

It is expected today that the National Cabinet will announce significant measures in regards to commercial leases. Retail outlets need to be prepared for further measures and adapt to different ways of engaging customers such as online and home delivery services.

Retailers have already closed their doors ahead of an announcement, which over the weekend included the closure of most David Jones stores, Myer, Adairs, the Cotton On group in addition to others who closed last week in response to concerns over their staff wellbeing.

Earlier this week the Shopping Centre Council of Australia (SCCA) made the commitment that no small or medium sized retailers in its centres would have a lease agreement terminated for the non-payment of rent as we work through this period. Members are strongly committed to working with tenants on a one-on-one basis to tailor support that best suits their circumstances.

Commercial tenants, landlords and financial institutions are encouraged to sit down together to find a way through to ensure that businesses can survive and be there on the other side. There is no doubt that this crisis requires all stakeholders to work through best solutions on a case by case basis, as well as work with layers of governments to provide as much assistance to businesses as possible.

As part of this, National Cabinet agreed to a common set of principles, endorsed by Treasurers, to underpin and govern intervention to aid commercial tenancies as follows:

  • a short term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies impacted by severe rental distress due to coronavirus;
  • tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease;
  • the reduction or waiver of rental payment for a defined period for impacted tenants;
  • the ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress;
  • commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus;
  • landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements; and
  • cost-sharing or deferral of losses between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance.

An example of local Councils providing support, City of Sydney Council has launched a $47.5 million support for community, business and creative sectors.

Clover Moore, The Lord Mayor said the package also includes measures to facilitate business continuity through the crisis.

“In this rapidly changing context, many businesses are struggling to trade according to the business model that, until two weeks ago, had proven successful. This relates particularly to businesses impacted by physical distancing measures, such as gyms, retail, cafés, restaurants and bars,” the Lord Mayor said.

“We are providing financial assistance to help businesses adapt and reinvent themselves by going online or shifting their model to abide by new health and safety restrictions. We will also provide financial support to encourage those who can undertake improvements to their premises or operating systems while customer interaction isn’t possible”, she said.

The new programs include the introduction of a Small Business Grants Program, valued at $2 million, will support businesses with innovation and adaptation grants to modify their operating model to produce income and supply products or services to address a current demand in the market. In addition, a Small Business Concierge Service will see staff offer advice to small businesses on support available from the City and direct them to appropriate State and Federal support packages, assisting them to navigate this difficult time.

The National Retail Association has today released a 10-Point Retail Recover Recovery Plan, designed to save thousands of businesses and jobs.

NRA Chief Executive Officer Dominique Lamb urged Federal and State Governments to adopt the entire plan, saying it would get businesses up and operating again as soon as it was safe to do so.

“At both the Federal and State Government levels we have already seen very strong and rapid responses to this health and economic crisis. Some of the points in our plan have been partially implemented, and some no doubt are in the pipeline”, Lamb said.

“And while we understand that the National Cabinet has a lot on its agenda, we urge the rapid adoption of the NRA’s 10-Point Retail Recovery Plan to get businesses back on their feet as quickly as possible.”, she said.

The plan includes:

  • Ensuring a consistent approach across all states to the National Rental Relief Scheme;
  • National Wage Subsidies, to get money into workers’ hands quickly;
  • Deferral of the Minimum Wage Review;
  • Further financial support for sole traders, micro business and small business;
  • All states to freeze Land Tax payments
  • Banks to freeze loan repayments, not defer them or compound the interest;
  • Federal fund for significantly impacted industries – tourism, fitness, hospitality and retail;
  • Investment in digital upskilling for business;
  • Begin work on a retail recovery plan, to help businesses reopen as soon as it is safe to do so
  • Fund a consumer confidence campaign, to get shoppers backing local retail as soon as possible.

Lamb said the idea of national wage subsidy would get money into the pockets of workers much faster than a welfare scheme, because the payment channels were already in place.

“Part of the challenge is finding the right policy solutions, and part of it is implementing them as quickly as possible. Retailers are very keen to be part of the solution. We look forward to engaging more with both levels of government to get business moving again as soon as possible”, Lamb said.

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Shopping Centre News (SCN) is in the ‘information business’, and is perceived as such by its readers. Daily industry news makes shoppingcentrenews.com.au a must-visit as part of the morning routine for those who want to keep right across the latest retail developments and events, while SCN's premium magazine is the leading publication for the shopping centre industry in Australia and New Zealand.

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