More shop closures and job losses likely if retail rent crisis not tackled, industry group warns

80% of retailers claim to be in arrears on their rent, according to a survey by industry group Retail Excellence

The survey found 20% of retailers saying landlords will not engage and are demanding full payment of rent due, including for the nine months of lockdown during which shops were closed.

Further shop closures and job losses are likely if more is not done to tackle the escalating retail rent crisis, an industry group has warned.

As many as 80% of retailers claim to be in arrears on their rent, with at least one landlord, according to a survey by industry group Retail Excellence.

The survey found 20% of retailers saying landlords will not engage and are demanding full payment of rent due, including for the nine months of lockdown during which shops were closed.

“We’re in a fragile situation. We may well see further store closures and job losses,” warned Retail Excellence managing director Duncan Graham.

There has been a bounce in trading since May, but that bounce is not going to pay for the lost business incurred over the previous 18 months. 

"The September/October period will either see continued strong trading or a softening and if we see a softening it’s going to be difficult,” he said.

The survey follows Retail Excellence’s appearance before the Oireachtas Enterprise Committee last month, at which the group called for a partial rent amnesty for shop-owners, more grant aid for the sector, an extension of the Employment Wage Subsidy Scheme into next year, and a legally-binding mediation body to allow for progress between retail tenants and landlords.

Arbitration service

The introduction of a more formalised arbitration service would mirror what is currently planned in the UK, where there is an estimated £6bn (€7bn) in outstanding uncollected retail rents.

It would also go “a long way” to preventing rental cases ending up in the courts, Mr Graham said. He has urged parties to, at least, avail of the existing code of conduct.

It is difficult to gauge the monetary amount of unpaid retail rent here, but more than 2,000 shops have closed in Ireland in the past 18 months and thousands of jobs have been lost. 

The number of retail workers availing of the Pandemic Unemployment Payment has dropped to 24,000 from 90,000 at the peak of the Covid crisis, but many of these people won’t have returned to work in the sector.

Lack of footfall

Mr Graham said the lack of footfall in the major towns and cities, due to the continued lack of office workers and overseas tourists, is also hampering retail's recovery – as is a significant shortage of available staff.

While some rent deals are being agreed between landlords and tenants, it is usually between shop owners and smaller local landlords that compromises are being struck. 

The majority of current cases where appropriate resolutions are not being found seem to feature larger institutional landlords and/or shopping centre owners.

Where landlords are willing to engage, the most common resolution offered has been 50% off rental payments on periods of closure, or a deferred payment plan, Retail Excellence said.

Mr Graham said last month that the retail industry had been “decimated” by the pandemic and that many businesses would not survive without action on rent and more Government supports.

He warned thousands of businesses are “on the brink”.