Shopping centres could be a battlefield in retail rent row

Smaller retailers on Irish shopping thoroughfares were among those worst affected by the coronavirus lockdown. The accelerated reopening of the sector on Monday may yet save some of them.

It would be hard, however, to find a cohort in business more egregiously wounded by the lockdown than retailers located inside shopping centres – still not allowed reopen – and their big institutional landlords.

Under the original reopening plan, shopping centre retailers were not meant to reopen until August 10th, three to six weeks after the reopening date for other shops. Public health authorities feared that reopening shopping centres too soon would lead to large numbers of people congregating indoors, exponentially raising the risks of fresh virus breakouts.

The retail industry lobbied furiously for an acceleration of the timetable. It argued that retailers inside shopping centres would have the worst of all worlds through an extended lockdown, coupled with the fact that any pent-up demand in the sector would be already satisfied by the time shopping centres reopened.

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This affected not only the retailers, but the big institutions that own shopping centres, such as Hammerson, which owns Dundrum, and Blackstone, which owns the Blanchardstown centre.

Protest

There had been rumours within the retail industry that, as a show of protest, some shopping centre retailers would reopen regardless of the Government’s lockdown unwinding timetable. This would have forced the State into taking enforcement action against SMEs, never a good look in a crisis.

Any Government assistance given to shopping centre retailers with their rent would, indirectly, be a bailout of the big institutional landlords. This would also be a minefield for the State in PR terms.

The Government has, under pressure, brought forward the reopening of shopping centres to next Monday, June 15th, although food courts must remain closed to prevent indoor congregation.

This solves the Government’s quandary in terms of preventing a legal showdown with disgruntled shop owners.

It does little, however, to ease the risks for the Government of being seen to implement a backdoor bailout of institutional landlords by using taxpayers’ money to pay shopping centre rent bills.

That battle will be interesting when it comes.