Retail property owners are shedding the discounts and other concessions they offered struggling tenants during the depths of the pandemic, the latest sign that competition for retail real estate is intensifying, the Wall Street Journal reported. Many landlords slashed rent prices as they struggled to fill empty storefronts during the first year of the pandemic. Some felt compelled to accept a portion of monthly sales instead of a fixed rent amount from tenants whose businesses collapsed because of government-mandated closures and social distancing. These arrangements helped retailers stay afloat, and prevented landlords from losing valued tenants. Now, landlords are having a much easier time filling prime retail space and are far less likely to agree to these concessions, said Ed Coury, senior managing director at retail-brokerage firm RCS Real Estate Advisors. Landlords’ increasing leverage is another sign of retail real estate’s recent strength. Store openings outpaced closures for the second straight year in 2023 after years of net closures, according to research firm Coresight Research. Consumer spending remained resilient last year despite high inflation and recession concerns, and Americans’ views on the economy are improving at the start of 2024. This, coupled with scant new construction of retail real estate, leaves landlords optimistic that retailers will be vying for limited available space for the foreseeable future.
