Working together to save the high street
With the economy starting to open up again after lockdown, it is tempting to think that business and the high streets are also returning to normal.
But with many people continuing to work from home, the high street is still struggling as workers are not picking up a coffee on the way to their desk, shopping in their lunch break or grabbing a pint at the pub after work. And with some people preferring to work from home, the long term effect could see businesses no longer needing large and expensive office space.
The change in how we work and shop will undoubtedly impact both landlords and tenants in the office sector and retail on the high street; Commercial Property Partner, Justin Hopkins discusses the importance of both parties working together at this time to keep businesses and the high street going.
While the reopening is great news for businesses and their landlords, it does not mean that tenants will be able to pay rent. On the contrary, it is anticipated there will be greater default in relation to the June quarter than the March quarter as tenants incur the cost of reopening their premises and reinstating staff who have been on furlough.
For some tenants, they may be considering whether it is financially worthwhile reopening at all as social distancing requirements are likely to increase expense and reduce income. If a lease is due to expire in the relatively near future or there is the opportunity to break the lease, then these might all be options for tenants who don’t feel that they can survive in a post COVID-19 world.
Given the current restrictions on rent collection and forfeiture, there is also a risk that many tenants will not pay their rents even if they can afford to do so; preferring to use their cash for other purposes.
The practical advice remains for landlords and tenants to seek to work together share information about their financial positions.
Going forward combining the likely changes to office work practices post COVID-19 with the rise of online trade the business world is going change for the office and high street sectors. Landlords and tenants will have to be collaborative and creative in looking at how the next phase of leases will be drafted to ensure that balance between certainty for both parties and flexibility for potentially nervous tenants.
If you need help to agree a rent concession, rent holiday or re-structure your lease, get in touch with Justin Hopkins today on 01935 813 691 or email Justin.hopkins@mogersdrewett.com.