Australia's shopping centres have waived $1.6 billion in rent for small and medium businesses since the onset of the coronavirus, the Shopping Centre Council of Australia says.
The industry group, which represents major retail landlords such as Westfield-operator Scentre and Vicinity Centre, has been monitoring rent relief agreements nationally, following the federal government's introduction of a mandatory code of practice.
Retail tenants operating small and medium businesses have to date relied on the mandatory code of practice introduced by the government in May to broker individual rent relief.
While each state has legislated its own code, the measures expire at the end of September when retailers will also lose access to Job Keeper wage-subsidy payments and an insolvency pause that’s allowed businesses to trade without responding to creditor queries.
The Shopping Centre Council said a total of 87 per cent of all small to medium-sized tenants had requested rental relief, with the hospitality industry the most in need of assistance.
Cafes and restaurants accounted for over a quarter of agreements, followed closely by retail services such as hairdressers, beauty salons and nail bars.
Omni-channel retailers—those that also sell goods online such as clothing and footwear retailers—have remained somewhat cushioned from losses due to store closures by ensuring customers can continue to fulfil their needs.
Of the $1.6 billion in waivers, NSW accounted for $581 million, Victoria $412 million, Queensland $366 million, Western Australia $100 million, South Australia $75 million and the ACT $27 million.
The figures for Tasmania and the Northern Territory were not disclosed but included in final total.
The combined August figure eclipses the total $1.5 billion in land tax exemptions state governments have provided for commercial and residential rentals.
Shopping Centre Council executive director Angus Nardi said a balance had been struck between helping those who need it while at the same time confronting the retail sector's own financial pressures.
“Our industry has provided substantial rental assistance to both SME and non-SME retailers,” Nardi said.
“However, we are unable to continue to shoulder that assistance, and for that reason, are not in a position to support the Code of Conduct’s extension where the cost of doing so falls exclusively on shopping centre owners.
“Unlike others, our sector stands alone in having regulation require us to provide direct financial assistance to third parties, which must be financed from our own resources, which are now exhausted.”
Policymakers in Melbourne, which has been plunged back into a second lockdown for at least six weeks, are now mulling an extension relief to tenants because of the economic ramifications.
Foot traffic across Melbourne's CBD, which averaged 1 million people per day prior to the coronavirus, has dropped significantly in recent weeks, with sensors at Melbourne Central—one of the CBD's biggest shopping hubs, recording about 4,700 visits day.
Nardi said that shopping centre landlords should be permitted to negotiate on a case-by-case tenants with landlords “taking into consideration a range of localised factors” and not be forced to negotiate along “formulaic” lines such as the turnover reduction requirement.
“It is in our commercial interests as well as the broader economy that SMEs have longevity within our centres as they provide products and services our customers want and support local jobs,” Nardi said.