COVID-19 – What you may not know about the impact on tenancies across Melbourne

By | 14/05/2020

COVID impacts

The virus caught many businesses unaware and since the State of Emergency was declared in Victoria there has been an immense amount of disruption.

COVID impactsBusinesses hardest hit were obviously those forced to close from March 23rd such as gyms, beauty and nail salons, masseurs, cinemas, pubs & bars, reception centres and restaurants.

Some businesses that at first glance should be doing well, have actually seen a large drop in trade. For example, a pizza shop in the outer suburbs struggles as many of the usual customers are now on JobKeeper support and watching their budgets. Whereas, an inner city pizza shop is struggling because of intense competition from restaurants now offering takeaway food.

Chemists have also experienced a turnover drop. Not because drug and prescription sales are down but because their other lines of cosmetics and beauty products are not moving.

Suppliers to the retail trade can also be affected where the payment terms of its customers has increased markedly. On paper however, their business turnover has not declined and they are not eligible for rent relief despite having severe cash flow issues.

Businesses that have relied on overseas mail delivery such as on online stores have suffered since Australia Post cut overseas services in mid March. There are many countries that have now surprisingly cut their air freight services and have severely restricted online business.

We are seeing up to 20% of tenants who seek rent relief are not eligible for the JobKeeper scheme. Whilst there are larger companies with a turnover exceeding $50 million pa, there are also many tenants who are not Australian citizens, are on bridging visas, are sole traders, the business has not been running for 12 months or are simply unable to navigate the process. This creates new challenges for us to resolve.

Despite the struggles and challenges, there have been plenty of good news stories.

COVID business impactsBusinesses that have boomed have been supermarkets, food delivery services, medical supplies, bike shops, music shops and sales of home gym equipment. Many service based businesses with an existing client base such as accountants have also seen increased activity.

You may also want to read our article here about successful retailing during COVID-19 in case you missed it.

We look forward to seeing everyone come out the other side of this stronger than ever.

Bill DiDonna

Written by Bill DiDonna 

Bill has more than 35 years of property management experience across Melbourne’s suburban commercial property market. He is a licenced estate agent, has an Associate Diploma in Real Estate Valuations (RMIT),is currently a committee member on the Commercial and Industrial chapter of the REIV and takes a keen interest in legal issues, trends and insights affecting property.

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