The closure of shops and restaurants for him alertness decreed by the coronavirus going to provoke a strong price drop of the commercial premises between 20 and 25%, according to the estimates made by Miquel Laborde Y Gerard Marcet, founding partners of the real estate Laborde Marcet. “Many businesses, especially small ones, will not be able to open if the closure lasts a couple of months,” warned Marcet, so the increase in empty stores will reduce rents and also sale prices.
Owners are now faced with non-payment of income of its tenants, both small businesses and large firms: some American fast food multinationals such as McDonald’s or KFC They have sent letters to the owners of the premises announcing that they stop paying the rent until they cannot open. The effect will also last over time, because many stores, including large fashion brands such as Inditex Y Mango They are asking their landlords to renegotiate the contracts with lower rents. “Inditex already did it in the previous crisis, asking for a 30% reduction in rents, which the owners ended up accepting,” Laborde recalled.
Big fast food firms stop paying rent and fashion renegotiates contracts
“The impact will depend on how long this situation lasts” acknowledged Laborde, who considered that “Will normalize prices”, Which had reached“ absurd levels, with returns that did not make much sense ”, of around 3% in the best locations. The price drops will be different depending on the area. “In very prime areas such as Passeig de Gràcia they will not drop more than 10 or 15%, because there are still family offices that even in these moments of uncertainty they are trying to buy, and those who are not worried about going a couple of months without collecting the rent, ”said Laborde. The premises in the second lines (Portaferrisa in the center, or the transversal of the Gràcia walk), they can see drops of up to 25%.
The confinement has also paralyzed the market: notaries do not sign operations, and those that were being negotiated have even postponed the signatures of private deposit contracts. In some cases, with signed deposits, operations are being broken, Laborde acknowledged, alleging delays in deadlines or the impossibility of providing official documentation. “There is a lot of uncertainty,” he acknowledged.
Landlords are forgiving rents or accepting 50% rebates so they don’t lose the tenant
The fear that many businesses may not reopen after the confinement is passing is encouraging owners to offer payment facilities to your tenants. “The little ones will have a worse time; Also the independent ones, because the big chains have more financial lung, and especially those that are more indebted, because we do not know if the bank is going to give them facilities to defer payments, “acknowledged Marcet. Therefore, many owners are accepting forgive the rent of the closing months, or 50% of the rent, and even negotiate a progressive increase in the rent until it reaches the contract. “It is preferable to reach agreements – said Laborde. Bringing a non-payment of income to the courts can take years to complete the problem.
According to Gerard Marcet, tenants can plead the force majeure of the closing in court to terminate the contract early, but not to default or reduce the rent. Also, remember, an empty premises at a time like the current one can cost a lot to rent and only accepting a strong price reduction.
After the uncertainty of the quarantine, and with a price adjustment, the real estate company anticipates that real estate operations will increase. “There’s a lot investor interest, and the situation in the financial markets consolidates the role of real estate as a refuge assetLaborde noted. In addition, in his opinion, a good product will come to market, from owners who need liquidity to face the difficulties of others in their businesses.