Real estate in Germany – retail landlords vs tenants corona
Commercial real estate renters in Germany demand a reduction in rent due to the corona
A few major retailers are demanding rental reductions – and smaller companies are awaiting the outcome
The German Retail Trade Association – Handelsbranden Deutschland (HDE) – has been busy recently with the sensitive issue of rents. Further arguing about Retail Landlords vs Tenants that the stores forced to close during the Corona crisis should pay only 50% of the rental fee. This is the agreed percentage between the parties contractually. Among other requirements, it advocates amendments to the Tenancy Act to adopt a risk distribution between tenants and the property owners in such exceptional circumstances.
In an interview with Trade magazine TextilWirtschaft, HDE CEO Stefan Ginett made clear what “risk sharing” means in concrete terms: “It is clear to everyone that it will come down to cost sharing. Legally, you will not be able to cancel the rent completely. But our retail merchants, as renters, have a right to fix the cost. Property owners must release tenants from half of the rental costs. Otherwise the dealers would sit on huge mountains of debt. It is our legal position, which we think is quite strong. “
Retail Landlords vs Tenants
In the Retail Landlords vs Tenants scenario, there are, of course, retail merchants who think 50% of rent is already too much. “In principle, rent should lower down according to the turnover. However, if it is zero, rent should also be zero,” the clothing store chain manager was quoted as saying. He is in favor of making a certain payment to the landlord. “A basic amount, such as 10% even when stores are not operating. And then, after the end of the pandemic, the rents needs adjustment to the probably even lower turnover.”
The giant retailer C&A has already expressed this position in a letter to its German landlords. She declines to pay rent for her 450 stores in April, and might demand “rent adjustments” the time after Corona quarantine lifts. And tasks property owners with closing her parties. C&A, owned by Dutch-German family Berninkmeider (also owners of Redevco real estate developer), and its latest steps are closely monitored by an army of smaller retailers pondering their next steps on their own.
