Market Report 2022

68

Retail - Colliers Market Report 2022

Relief packages keeping down rent arrears However, the accelerated development in the retail landscape due to COVID-19 has not been altogether favourable. In fact, many retailers have only survived thanks to relief packages, rent reductions and deferred payments. An industry otherwise relying fully on liquidity from sales has therefore been able to pull through even though sales slumped. It is worth noting, however, that Danes’ frozen holiday funds were released for payment in 2020, just as retailers were offered the possibility of deferring VAT and tax payments, which has served to miti gate the liquidity shortage due to periodically decreasing sales. Further to rent reductions and deferred payments, multiple large retail chains leveraged the situation to renegotiate lease agreements on business-critical locations, although so far it seems to have been unnecessary in order to weather the cri sis. This may be inferred directly from the Danish Property

Federation’s report on rent arrears, showing that Danish retail ers today have reduced rent arrears to the lowest level seen since the onset of the coronacrisis in March 2020. This trend is expected to continue, reducing rent arrears to pre-coronacrisis levels, always provided, however, that the Danish Government does not feel the need for renewed lockdowns. The low level of rent arrears contributes to and supports a stronger market, leaving room for further growth. Compared to developments in other European economies, Denmark has escaped the crisis relatively unscathed.

Decline in rent arrears on all property types, with August 2021 seeing the lowest level recorded since the outbreak of COVID-19

12%

10%

8%

6%

4%

2%

0

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2020

2021

Shops

All properties

Note: Rent arrears cited as percentage of annual rent. Source : The Danish Property Federation, market statistics