Retailers Surpass 95% Rent Payments

September 22, 2021

The retail market is on the path to recovery, but there remains a clear bifurcation between national and non-national retailers. Overall, rent collection among national tenants has hit 95%, where rent collection among non-national tenants has not yet surpassed 90%.

Unsurprisingly, August 2021 rent collection trends do look markedly better than they did in August 2020. Collections for last month eclipsed 92%, which is 12% ahead of those same numbers in August 2020. Nationals did even better, surpassing the 95% collection threshold,” Mark Sigal of Datex Property Solutions tells GlobeSt.com.

While payment from non-national retail tenants still has yet to surpass 90% rent collection, Sigal notes that the recovery among this retail segment is actually strong. Ironically, their improvement has outpaced the recovery of nationals year over year, up 14.5% in that time, albeit off a lower base number with non-nationals paid just under 90% of their rent,” he says.

Due to the disruption in 2020, Sigal says that looking at data from 2019 is helpful in assessing the recovery. “Having faced a global pandemic that disrupted everything and everyone in the world in 2020, it seems intuitive that in the face of our new normal, the numbers for retail in 2021 should look a lot better than 2020, given the high numbers of Americans that are vaxxed, masked and socially distanced,” he says. “Armed with good data, we can also look pre-pandemic at the numbers in 2019 so as to gauge collections in general, compare nationals to non-nationals, and check capacity to pay metrics like retail sales and occupancy cost reporting.”

Taking 2019 rent collections into account, Sigal says that retail is far along in its recovery. “The news is encouraging, with August 2021 collections just 2% off the 2019 numbers,” he says.

When looking at specific merchant categories and including sales data, Sigal says that there are some interesting trends. First, rent collections for auto parts retailers are down 21% year-over-year, and are down from both 2020 and 2019. This suggests, according to Sigal, “that people are driving less, and thus spending less on auto maintenance.” Rent collections among fast food chains are up 29% from 2019, even as occupancy costs are down 14%, illustrating the way that the pandemic fueled growth in some categories.

The fitness category was one that was greatly impacted by the pandemic due to mandated business closures. However, the retail segment has already rebounded with rent collections back to 88%. And while rent collections are still down 9% compared to 2019, they are up nearly 58% year-over-year. The category still has a long road ahead to recovery. According to Sigal, retail Sales are down 26% compared to 2019, which has caused occupancy costs to increase a staggering 67% since 2019. “This is a category that remains under stress,” he says. Sporting goods has shown similar volatility. However, sporting goods retail sales are up 68% over 2019 and 75% over 2020, helping to drive occupancy costs down by two-thirds.

Lastly, the pet supplies category is noteworthy due to strong rent collections and sales growth. The retail segment has 95% rent collections, and retail sales are up 11% year-over-year and 57% over 2019. “This has resulted in Occupancy Costs that have fallen by 38% since 2019, 17% since last year, and 33% over the past couple months,” says Sigal. “This is a very healthy category, and love of all things pets have only been bolstered by the pandemic.”

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