Once again, it is very difficult for retailers and real estate entrepreneurs to agree on a solution for shop rent during the corona crisis. After the first outbreak of the virus at the beginning of last year, when many retailers voluntarily closed their businesses for weeks, it often took months before tenants and landlords found each other. In the discussions about rent compensation during the second lockdown of this winter, the same scenario is now looming in many places, according to a poll by the retail trade association INretail.
Retailers were forced to close their doors in mid-December, a measure intended to contain a second and third wave of corona infections. The forced closure lasted until the end of April, although retailers have been allowed to open for shopping by appointment since the beginning of March. Non-food companies in particular had a hard time: they saw their turnover drop by more than 20 percent on average last quarter, the Central Bureau of Statistics recently calculated.
About 5,000 companies with a total of 15,000 stores are affiliated with INretail. About 750 members participated in the poll, mainly small and medium-sized companies. Separate discussions were held with large chains, which do business with several landlords at the same time and therefore hardly fit into one category. There too, the outcome of conversations varies greatly, says Marcel Evers, manager at the trade association.
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Almost 40 percent of the shopkeepers surveyed have still not been able to make agreements about the rent during the second lockdown. Just under half of that group is still in talks with the landlord, with the rest the negotiations have broken down without result.
In situations in which the shopkeeper and landlord sometimes came to an agreement, 37 percent received a rental discount of 20 to 40 percent in the months of the store closing. A comparable group received a 40 to 50 percent discount. Yet 10 percent of the shopkeepers who made agreements with the landlord say they are dissatisfied with the outcome.
Evers is surprised that there is still no solution in so many places. He points out that last year politics already called on companies and landlords to share the pain. In various lawsuits that were filed last year, judges came to the same conclusion: with a loss of turnover of 100 percent, tenants were entitled to a 50 percent rent discount. If the turnover decreased less, the discount also decreases.
Landlords are also surprised at the outcome, but for a different reason. According to them, in many more cases there is already an agreement. Vastgoed Belang, the association for private real estate investors, conducted a poll among members in February and came to the conclusion that agreements had been made in 80 percent of the cases. “In cases where this did not work, there were demonstrable reasons for this,” says director Laurens van de Noort.
According to Vastgoed Belang, 60% of the cases involved partial remission, while the rest involved postponement. During the first lease negotiations last year, it became apparent that tenants and landlords sometimes have fundamental differences of opinion. Where postponement feels like a solution to the landlord, the retailer sees it as shifting the problem.
Property owners also see that conversations are difficult. According to Van de Noort, the main reason is that entrepreneurs do not provide insight into financial performance, or remain vague about how much government support they received for the fixed costs. Frank van Blokland of IVBN, the association for institutional real estate investors, also noticed this. “And if that openness is not forthcoming, I understand that we will not come to a settlement.”
Another point of contention is the turnover that companies make through online sales: does that count when calculating the rental discount? INretail does not think so, and believes that parties should look at the drop in turnover in the physical store. “After all, the rent is related to the physical store,” says manager Marcel Evers.
Van de Noor sees it differently. “You have to look at the entire company: what is the blow of corona. You also have stores where physical turnover has fallen, and that blow has been fully compensated by the growth online. It is then very strange to expect the landlord to invest in full.”