Brick-and-mortar stores were struggling before the pandemic. But now, the retail sector owes $52 billion in back rent.
An analysis of data from CoStar found that retailers nationwide had missed two to four months’ rent, according to Bloomberg. Questions remain about how the pandemic and changing consumer preferences will affect the sector in the long run.
Even when a Covid-19 vaccine becomes widely available, the amount of debt may be insurmountable, industry pros say. An increasing number of brick-and-mortar stores, faced with expanded online shopping choices and lingering skittishness about the virus, may pack it in for good.
“You’re going to have big bubbles that are going to be hitting next year or even in the fourth quarter,” Andy Graiser, co-president of A&G Real Estate Partners, told Bloomberg. “I’m not sure if they are going to be able to make those payments in addition to their existing rent.”
Retailers’ requests for relief continue to pour in. TIAA Real Estate Account received more than a thousand requests for deferrals from tenants, most of them from retailers.
Rent collected from retailers improved to 89 percent in October, far better than the dire numbers in April, when retail landlords collected just 54 percent of rent. Malls have lagged behind, however, collecting only 79 percent of November rent.
“It’s going to take a period of years, not months, to get through this,” Michael Hirschfeld, vice chairman at JLL, told Bloomberg. [Bloomberg] — Georgia Kromrei