The commercial property market is bracing for recessionary phenomena in the coming months that will be reminiscent of the 2012-13 slump, as chains and stores are struggling to stay afloat.
Managers of major commercial groups have already started implementing their post-lockdown plans. Cost reduction, particularly as far as rentals are concerned, is among their top priorities, with an obvious impact on the property market.
There is already significant pressure on property owners to adjust their lease contracts signed in recent years, either toward a major drop in rents or in some cases even their total suspension.
Such is the case of the Fourlis group (operator of the brands IKEA, Intersport and The Athlete’s Foot), as its management informed investors on Wednesday that it has been locked in talks to renegotiate the contracts for all 160 properties it leases, at least until the end of the year.
Until then it wants the abolition of the minimum guaranteed rent, pressing for the payment to landlords of only a fixed share of turnover instead.
This was the pattern followed in 2012-13 by certain chains such as Jumbo and H&M so as to spread their risks. Several other retail chains are currently considering pushing for a similar deal to last until the end of 2020 at the earliest.