Can rent relief soothe the commercial market's woes?

The coronavirus pandemic has hit the commercial sector especially hard, with around 21% of Canadian commercial tenants requesting rent relief in April, according to Colliers Canada.

Covering 7,100 respondents in the retail, industrial, and office sectors, the Colliers survey also found that nearly half of these tenants would not be able to afford their rent payments.

“Now more than ever, tenants and property owners need to openly communicate and maintain strong working relationships to keep businesses on both sides operating,” said John Duda, president of real estate management services with Colliers Canada. “Property owners should do all they can to enable tenants to remain open or reopen safely, and they should actively participate in government and industry back-to-work committees to ensure that this transition occurs safely and efficiently.”

However, while ventures of all sizes have flocked to the Canada Emergency Commercial Rent Assistance (CECRA) program, some observers said that this would not be sufficient to address the problem.

The Colliers poll found that small -business tenants were 2.7 times more likely to request rent relief than regional, national, or international tenants.

Also, tenants whose businesses were completely shut down were 3.4 times more likely to request rent relief than tenants who remained open, whether fully, partially, or remotely.

“Landlords and tenants are facing pending rent deadlines with some uncertainty, as there are landlords who have indicated that they are still waiting for more program details before deciding to apply for CECRA,” Duda said. “More information is needed in a number of important areas, including how the program will treat landlords who have agreed to revised rental payment terms for April or May with their tenants, when the loan funds will be available, and how this program will be rolled out for each province.”