There are many examples of commercial landlords and tenants reaching mutually-acceptable agreements about rent payments during lockdown, and many tenants are optimistic about rebuilding their businesses, according to a new survey.
Ray White Commercial’s Auckland Tenant Survey asked commercial tenants about their experiences during the Covid-19 Level Four lockdown, and their expectations for restarting operations when lockdown is lifted.
The survey highlighted some positive trends amid the uncertainty, says Ray White Commercial broker Conrad Traill.
“As expected, there are many tenants who are very frustrated as they don’t feel there is anything legally they can do about getting a rental abatement; but on the whole it was really encouraging to hear the vast majority of tenants and landlords have worked through mutually acceptable terms,” he says.
The survey found that across the industrial, retail and office sectors, average rent abatements agreed represented a 35% discount, with industrial slightly lower and office & retail slightly higher. Most discounts were offered on a month-by-month basis.
In many cases there has been willingness from parties on both sides to negotiate and share the pain, says Ray White Commercial broker Danny Guise.
“In some instances, this event has been a catalyst for landlords and tenants to improve their relationship with each other. There is compromise occurring on both sides and often without undue influence from external advisers.”
The team also noted encouraging signs when asking tenants about their expectations for getting back to business post-lockdown.
There was significant optimism from tenants who expected to be able to remain in the same premises after lockdown, with 70% saying their current accommodation would still be suitable and a further small proportion of respondents suggesting they may even grow.
69% of tenants anticipated keeping their staffing levels the same post-lockdown, with most of those tenants in the office sector. In the retail sector, the result was similar, with a further 5.5% even wanting to increase their staff levels.
Ray White Commercial broker Ben Walker says that although there has been pain and struggle in the market, “it has been very encouraging to see the willingness between landlords and tenants to work together and strategise to ensure both parties make it through and keep their doors open for business,” he says.
Fellow broker Amit Mehta says the Ray White Commercial team contacted hundreds of tenants, as well as landlords, in the first weeks of lockdown to conduct the survey.
“Tenants and landlords were happy to hear from us, and most advised we were the first agents to touch base.”
Nigel Ingham, co-owner of Ray White Commercial Auckland, says his team has spent significant time during the lockdown period making phone calls to landlords and tenants to gather information.
“We know the market insights our brokers have gained by making these calls will be invaluable to tenants and landlords, and we are very proud of our team for their hard work and initiative during this unprecedented and difficult time for the commercial property market.”
Click to view the survey – Ray White Commercial’s Auckland Tenant Survey