How Should Commercial Landlords Handle Shop Closures

News put this month has painted a grim picture of UK high streets with closures occurring at a rapid rate in many towns and cities across the UK including London which is surprisingly among the worst hit. All of this will be cause for alarm among commercial property landlords letting retail spaces.  

According to a study by accountancy firm PwC, a net total of 1,123 shops closed their doors for the final time in the first half of the year. Retailers such as Homebase look are set to follow a string of major stores also considering closures across the country as they look at the viability of their portfolio on a case by case basis.    

So with an average 14 shops a day closing what can commercial landlords do to prepare for the worst and deal with that worst case scenario if it arrives?  

While many retailers are struggling with difficult trading conditions there will be cases where rent payments are missed due to exceptional circumstances. The landlord must decide whether to accept the missed payments and trust that the tenants will be able to recover.  

Taking possession of a property under forfeiture of the lease or commercial rent arrears recovery (CRAR) measures is another option. Much will depend of course on the relationship you have with your tenants and how much you are prepared to exercise patience in the current climate.

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