The resumption of full payments could take at least six weeks once the economy fully reopens
Commercial rent collection will not immediately resume at its previous pace even after businesses nationwide have restarted their operations, according to Colliers Canada.
The company “anticipates a lag of six weeks between reopening dates and an uptick in collections due to businesses and consumers taking time to assess the situation as conditions start to return to normal,” Colliers said in its latest market analysis. “Rent collection deteriorated by 1% in March, 10% in April and 13% in May from February’s baseline.”
Data from the real estate services firm also showed that 39% of commercial tenants who requested rent relief did not pay rent in April, while 19% made partial payments. Another 16% did not pay rent in May.
John Duda, president of real estate management services at Colliers Canada, said that multiple drivers contributed to the April-May trend, including the “overall deterioration of conditions that many businesses are facing due to closures or decreasing demand, and the fact that some tenants and owners have been in a holding pattern regarding rent payments and deferral discussions while learning more about the Canada Emergency Commercial Rent Assistance (CECRA) program, which recently opened for applications.”
While the impact of CECRA will not be fully apparent until at least July, Duda expressed confidence in the market’s fundamental resilience.
“It is in everyone’s best interests to work together to ensure a safe and successful reopening,” Duda said. “Tenants and landlords are familiarizing themselves with the government’s rent relief supports, and many landlords are taking proactive action to find mutually beneficial solutions.”