The Covid-19 pandemic has exacerbated the pressure on the commercial property sector, with lockdowns acting as the proverbial straw that broke the camel’s back. This impact was reflected in tenant payment performance which deteriorated rapidly during the hard lockdown with TPN data showing that only 40% of retail tenants were in good standing in May 2020, compared to 77.85% of commercial tenants in good standing in the first quarter of 2020. Tenants in good standing are those who have settled their balance in full.
Fast forward 12 months later and nationally the percentage of commercial tenants in good standing reached 62.5% in the first quarter of 2021, a small improvement from the 61.62% of tenants in good standing in the fourth quarter of 2020, but a figure still significantly short of levels before the pandemic.
In 2020 the property industry established the Property Industry Group with the aim of providing assistance and relief packages for small and medium sized retail tenants facing revenue challenges as a result of the lockdown in a bid to try and save businesses from failing and to preserve jobs. In total landlords provided R3bn in rent relief between April and June 2020, significantly reducing the number of tenants who were more than three months in arrears with their rent.