Retail rent payments improved, albeit nominally, in May. According to data from Datex Property Solutions, a company that tracks retail rent activity, there was a slight uptick in rent payments during the first two weeks of May compared to the same period in April. Still, the numbers are not promising. Through May 15, only 51.35% of retail rent was collected, compared to 48.9% in April. National retail collections are stronger with 53.2% of rents collected in the subcategory in May, compared to 50.65% in April.

"As a frame of reference, since late fees kick in after the tenth in most leases, this is a pretty good indicator of overall monthly trends, which also explains why March 15th data showed 87.4% total rents collected, and 91.6% collected for national tenants," Mark Sigal, CEO of Datex Property Solutions, tells GlobeSt.com. "By the time the stay at home orders kicked in in most of the country in mid-March, most retail rents had been paid."

The increase in May payments could be due to a combination of deferral plans forged between landlords and tenants as well as the arrival of PPP funding to relieve retailers. "I would note that with May being the first month that rent relief agreements are starting to factor in, that the collections picture is likely somewhat weaker than the May numbers show, owing to the level of rent deferrals we are seeing," says Sigal.

Unsurprisingly, grocery stores have led in rent collections. The grocery retail category has brought in 97% to 99% of gross rents during the pandemic. Likewise, drug stores have outperformed other retailers in terms of rent collections. "With virtually everyone working from home, kids being home from school, sit down restaurant dining out of the picture, and the occasional toilet paper hoarders, grocery stores are paying their rents just fine," says Sigal, adding that drug stores are also in the same collection range. Financial services, including banks, are also making rent payments, although slightly less than grocery and drug stores, in the 90% to 95% range.

Other retail segments are bifurcated and largely dependent on the size and credit of the retailer. "Quick service restaurants, which are already configured well for take-out and delivery, fall into two buckets: the strong—like Chick Fil-A and Chipotle, are in the 90% to 97% range—and the not so strong, like Subway, Panera and Jamba Juice—which range from 30% to 60% collected range," says Sigal. "At the other extreme are the lifestyle retailers, such as Movie Theaters and Gyms, which are paying very little of their rents. There are lots of interesting narratives in the data."

Instant Insights /

Retail Rent Increases in May, Ever So Slightly

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