Additional data reports that 21% of commercial tenants across Canada requested rent relief in April. Of those tenants, 39% did not pay rent, 19% made partial payments, and 42% paid full rent in May
Rent collections are expected to recover six weeks after businesses reopen
Vancouver, BC, June 8, 2020 – New data from Colliers Canada reveals that 16% of Canadian commercial tenants paid no rent in May 2020 as rent collection continues to decrease during the COVID-19 pandemic. In addition, the company’s latest report shows that 39% of tenants who asked for rent relief in April did not make any payments for May, while 19% provided partial payments and 42% made full payments.
The Rent Collection and Relief Status report resurveyed 7,100 tenants across Canada in May as a follow-up to an April survey that showed 21% of retail, industrial and office tenants requested rent relief amid the ongoing financial impact of the COVID-19 pandemic.
Meanwhile, rent collections in Canada are continuing a downward trend that began in March due to the impacts of the pandemic. Rent collection deteriorated by 1% in March, 10% in April and 13% in May from February’s baseline. A further decline in June’s rent collections is anticipated before improving in July and August, assuming the reopening of businesses continues. Colliers anticipates a lag of six weeks between reopening dates and an uptick in collections due to businesses and consumers taking time to assess the situation as conditions start to return to normal.
“There are several factors contributing to the decline in rent payments from April to May,” says John Duda, President of Real Estate Management Services at Colliers Canada. “These include overall deterioration of conditions that many businesses are facing due to closures or decreasing demand, and the fact that some tenants and owners have been in a holding pattern regarding rent payments and deferral discussions while learning more about the Canada Emergency Commercial Rent Assistance (CECRA) program, which recently opened for applications.”
The May report also examined the duration of rent relief requests, and revealed these additional findings:
- Of the tenants who requested rent relief, 23% were able to negotiate direct relief agreements with their landlords outside of CECRA. Of that number, 94% were granted deferrals and 6% were granted rent abatements.
- The most common relief duration is three months, with 46% of tenants being granted this length of relief, 28% granted two months of relief and 18% granted one month of relief.
- Retail tenants are most likely to have come to an agreement on rent deferrals (18%), followed by industrial tenants (14%) and then office tenants (11%).
Applications open but impact yet to be determined for CECRA program
Colliers believes that the impact of the CECRA program on collections won’t be clear until July. The Government of Canada opened applications for the program to provide financial support for Canadian small businesses on May 25, but it will likely take until July for owners and tenants to know where they stand with the program. There are also still areas that require further clarification, particularly around the administrative process and flexibility of legal agreement requirements.
“It is in everyone’s best interests to work together to ensure a safe and successful reopening,” says Duda. “Tenants and landlords are familiarizing themselves with the government’s rent relief supports, and many landlords are taking proactive action to find mutually beneficial solutions. As businesses begin to reopen, we are assisting tenants and landlords by identifying additional cost effective operational support to help them meet new hygiene, physical distancing, and government requirements, and be flexible in making any reasonable accommodations, such as facilitating curbside pickup options for retail stores.”
Colliers Canada’s Real Estate Management Services will continue to release monthly reports analyzing how COVID-19 is impacting tenants, landlords and the commercial real estate market, so that they can help stakeholders navigate uncertainties as the pandemic continues to affect businesses across Canada.
For further information, please contact:
Pamela L. Smith
Director, Corporate Communications, Colliers Canada
Phone: 604-692-1461 / 604-787-8872