IS there light at the end of the tunnel for the commercial property market? Stock markets around the world have certainly welcomed the prospect of a vaccine in the near term which bodes well for business in general and indeed this renewed optimism will only help to bolster the prospects for the commercial market.
There will no doubt be further CVAs and administrations of retailers as the lockdowns are extended, the latest victims being Café Nero and Peacocks (Café Nero has over 20 units in Northern Ireland and Peacocks has 18).
Whilst we have the utmost sympathy for these retail businesses and the staff they employ, it's hard not to feel that landlords are ultimately bearing much of the financial burden of the lock down.
In many cases landlords have not received any rent since the beginning of 2020 and most have agreed rent holidays with their tenants in an attempt to keep these businesses going, only to be informed that businesses are closing and there is no prospect of recovering any arrears.
Landlords in most cases have loans to pay on their properties and whilst most banks have allowed for deferred payments, ultimately the loans will need to be repaid. Despite all the interventions of government, landlords have not received any support from them even though their businesses have been fundamentally affected by the lockdowns.
As one pundit described it on the radio recently: “The current interventions are like government supporting all the pilots and airports but doing nothing for the airlines. Unless we address the needs of the airlines, there will be limited need for the pilots and indeed the airports”.
Landlords have not traditionally had much sympathy, and I can hear you say why should the government give them support? What the general public tends to forget is that most of our larger property assets are owned by pension funds or institutions that pension funds invest in. So, by not supporting our landlords throughout this period we are effectively penalising pensioners who rely on these organisations to fund their retirement.
Whilst high street retail has been struggling and demand for office space is limited now, we are starting to see a more positive business environment brought on by the prospect of an effective vaccine. The importance of the vaccine cannot be underestimated for business in general. The light at the end of the tunnel creates an environment which allows businesses both large and small to plan.
The resilience of many of our local businesses has been encouraging and their ability to adapt to a new and changing environment and embrace technology and home working has been heartening. We should also not forget that there are sectors of our economy that are performing very well, including DIY/home improvement retailers, not to mention food stores that have remained open through all the various lockdowns, and local companies like Kainos who have seen their profits double in the first half of 2020.
In the spirit of the renewed optimism brought on by the vaccine spare a thought for landlords both large and small who are bearing much of the burden of the lockdown and have received little or no support from government. And remember, many of these landlords are the ones who will pay your pensions.
:: Declan Flynn (dflynn@lisney.com) is managing director of Lisney (www.lisney.com) in Belfast
