Even though stores are open again, retailers are still trying to recover from the disruption to their business caused by the coronavirus pandemic. Landlords are feeling the pain, too. According to the National Retail Federation, less than a third of companies paid 75% or more of their rent in June. More than half of the respondents said they received some form of rent relief, often deferrals. But some companies clashed with their landlords, and a few took the fight to court.
The tension isn't likely to end any time soon. There is a movement among retailers to pay rent that is a certain percentage of their sales, rather than a fixed amount every month. Landlords dislike this structure for its uncertainty. But retailers still hold one very important card, especially during times of disruption and distress: they can close their stores and leave. For this reason, landlords may have to make big concessions to keep their tenants.
Another part of the problem: Analysts say rents still need to fall in some markets because they have become too high for many businesses to justify paying.