The Irish Auctioneers & Valuers Institute (IAVI) has published the results of a National survey on retail rent renegotiations outside of the formal rent review process carried out among its members, who act for both landlords and tenants.

According to IAVI President Aine Myler, “The survey results suggest that the majority (95%) of respondents reported that in their experience over the past 12 months, landlords were either ‘very’ flexible or ‘somewhat’ flexible in their approach to retail rent renegotiations. Meanwhile almost half (48%) of the respondents reported that in their experience, tenants’ approach to retail rent renegotiations was ‘somewhat flexible’, with a slightly lower percentage (41%) saying tenants' attitudes were ‘inflexible’ This is not surprising, as the only acceptable solution for most tenants would have been a rent reduction”.

Ms. Myler added, “These results suggest that both landlords and tenants recognise that flexibility is required in the current difficult market conditions. This is evidenced by a significant number of retail rent renegotiations and in many cases, rent reductions, taking place outside the formal rent review process.

The most common outcome as a result of the retail rent renegotiations across all retail property types was a decrease in rents of 10-20% (in 75 actual cases) followed by a decrease in rents of 21-30% (in 69 cases).

IAVI members reported that ‘temporary reduction only’ was the most common lease term negotiated on behalf of landlords and that ‘rent free period’ was the most common term negotiated on behalf of tenants”.

“While a slight majority (51%) of respondents viewed the ban as equitable, members' commentary suggested it was largely viewed as unnecessary as the market was already responding by way of shorter leases and, in some instances, turnover rents. There were also concerns expressed about the medium-to-long-term effect this could have on new development and the attractiveness of property as an investment vehicle”.

“However, it is in everyone’s interests to have a properly functioning retail property market and we look forward to highlighting the experiences of IAVI members in retail rent renegotiations on behalf of both landlords and tenants outside of the rent review process at the forthcoming working group with the Department of Justice” commented Ms. Myler.

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