Commercial landlords and private commercial property investors have become some of the forgotten victims of the COVID-19 pandemic. Having been forced to close their establishments entirely or seen businesses slow to a crawl, countless retailers have found themselves struggling to pay their monthly rents.
Worse still for those affected, the events of 2020 massively accelerated the shift to online retail for a major proportion of UK shoppers. This has led many to conclude that even when the COVID-19 crisis is a thing of the past, previous footfall levels and the popularity of traditional retail may never return.
Landlords set to take a hit
While it is usually the plight of struggling tenants that is highlighted in the press, landlords and commercial property investors are warning of a stark future for their own businesses without governmental support.
For the vast majority of commercial landlords, no grants or financial support have been available throughout the crisis. Funding their business activities purely on the basis of monthly rent payments by their tenants, many gradually found their income and cash flow drying up over the past 12 months.
Even before COVID-19 arrived in the UK, more people than ever before were shopping online, reducing visits to the High Street. According to one study conducted by Springboard, average UK High Street footfall was already falling by approximately 1.3% every year during the period between 2011 and 2019.
By the end of this year and heading into 2020, the consultancy expects footfall to be down by as much as 15% compared to pre-pandemic levels. Although this is a national average estimate, it is inevitable that some areas will be hit much harder than others.
Along with a tendency to shop online, Springboard cited working from home as one of the major reasons for a significant fall in traditional High Street foot traffic. No longer commuting by way of public transport or working from offices away from home, millions of workers no longer “pop out” to the shops before, during, or after their shifts as they used to.
Mounting rent arrears
Surveys conducted throughout the COVID-19 crisis have painted a picture of commercial and residential landlords being more lenient with struggling tenants than ever before. The government even introduced legislation to prevent private residential landlords from evicting tenants for several months in cases where rent arrears were caused by COVID-related complications.
However, agreements reached between tenants and landlords (commercial and residential) regarding deferred payments have resulted in many tenants facing elevated or insurmountable rent arrears. An issue highlighted on numerous occasions by those affected, though one that the government has so far done nothing to address, with no support being offered to those affected.
While the COVID-19 crisis alone cannot be realistically blamed for the death of the High Street, it could nonetheless result in a wave of commercial landlords and retailers going permanently out of business.