In a recent survey of property management groups across the US, Retailsphere asked several questions regarding rent abatement requests, specifically looking at which retail categories have made these requests most and least frequently. With over 66,000 units representing over 4,400 shopping centers in every geography in the US, it turns out that salons asked for the most help with their rent, making up 36% of all abatement requests. Gyms and fitness brands were the second largest group to request abatements, making ~13% of all requests.
On average, 45% of all salons asked for rent abatement. Fitness related brands and franchises both had an average of 15.7% of locations ask for rent abatement. The least rent abatement was seen in child-related retail, with an average of only 7.7% of retail locations making requests.
Survey respondents assumed these categories most frequently asked for abatements as a result of frequent forced closures, and in many cases, state mandated delays in re-opening. These delays have been especially problematic for gyms. One Florida management group said, “fitness gyms that offer basketball, pickleball and racquetball have a harder time bouncing back because of the restrictions. We’ve seen 55% of our fitness tenants request rent abatement as a result.”
When you compare the East versus the Western United States, rent abatement requests become a bit more interesting. Both regions had almost the same average request rate, 16.9% average on the East coast and 16.4% average on the West coast. Both regions still saw salons making up the largest portion of the rent abatement requests, followed by fitness and then franchise tenants.
The West coast, however, saw larger averages in food, fitness, and franchises than the East coast. The East coast saw higher averages of rent abatement requests in salon, child-related, national brands, and medical retail tenants than the West coast.
Salon retail was the category with the largest difference between geographies, with East coast salons making rent abatement requests an average of 8% more often than the West coast. The next largest difference was in medical retail tenants, again with East coast tenants making abatement requests 5.4% more often than their West coast counterparts. The category where the West coast most outpaced the East was in food and restaurants, with an average of 4.8% more rent abatement requests.
When interviewed, Mark Brutten of Brixton Capital, said “The restaurant industry was able to stay open, but some restaurants were not prepared for take out only and delivery. Some ran out of take out supplies and because the warehouses they get their food trays from were closed, they could not replenish. A lot of essential businesses were not even thought of as essential and were forced to close.“
There is no question, the Coronavirus pandemic has put additional stress on many stores already struggling. As many stores have been forced to stay closed, this stress has now started to impact shopping centers and retail commercial real estate groups. Rent abatement requests may just be the beginning of the turmoil many of these locations will face before Covid-19 restrictions begin to lift.
Retailsphere will continue to perform outreach and survey for information related to Covid-19 rent abatements and restrictions and will update on our blog. If you’re interested in learning more about Retailsphere’s data collection and research team, reach out to Retailsphere today to speak to someone about our extensive retailer database or request a personalized demo.