Skip to main content

The Eaton Centre is seen during the coronavirus pandemic on April 23, 2020 in Toronto.Emma McIntyre/Getty Images

Canada’s biggest mall owners have collected only about 15 per cent of their tenants’ rent in May, according to new data that shows the dire state of business during the coronavirus pandemic.

Retailers big and small have seen revenues vanish after provincial governments shuttered non-essential activity to stop the spread of the virus. Malls were forced to close in March, and some retailers had already shut their doors.

The new data from Chicago-based real estate services firm Jones Lang LaSalle Inc. found that major Canadian mall operators received approximately 15 per cent of the rent due this month, according to numbers it compiled from landlords and tenants. This follows April’s figure of around 25 per cent.

And even though some provinces are starting to slowly reopen their economies, landlords are expected to face a similar situation next month. “I think June rent looks the same as May. It may pop a bit,” said JLL executive vice-president Tim Sanderson.

Well known brands like GoodLife Fitness and shoe chain Aldo Group have not paid rent for two months, along with other smaller retailers. Aldo and U.S. fashion retailer J.Crew, which has some stores in Canada, are filing for bankruptcy protection. Department store chains, which anchor many large malls, were already struggling to retain customers before the pandemic. U.S. luxury retail chain Neiman Marcus has also filed for bankruptcy protection.

Failing retailers will leave mall landlords with space to fill. The most prominent enclosed malls in the country are owned by Canadian pension funds’ real estate companies. That includes Cadillac Fairview’s Eaton Centre in downtown Toronto, Oxford Properties’ Yorkdale Shopping Centre in north Toronto and Ivanhoe Cambridge’s Montreal Eaton Centre in downtown Montreal.

The three pension-fund real estate companies, which together operate more than 50 enclosed malls in Canada, all started offering rent deferrals to their hardest hit tenants in April.

Oxford said its rent collections "mirror the challenges that all enclosed malls have faced during this lockdown period.” Ivanhoe Cambridge said “anything pertaining to our lease agreements is confidential in nature.” Cadillac Fairview declined to comment specifically on the amount of May rent that was collected.

The three real estate companies and other landlords may be able to recoup some of the lost revenue through a federal rent relief program for small companies, as long as the retailer’s annual revenue is under $20-million and it lost a minimum of 70 per cent of its business since the pandemic. In addition, this week Ottawa announced new measures to extend loans for large companies, which may aid some of the larger retailers.

Nevertheless, recouping lost rent and collecting more revenue when malls reopen will be tricky. The malls’ retailers may not be ready when the landlord is set to open the doors. The retailer may not have staff or they may still be figuring out how to operate safely, or they might not have the proper equipment, such as Plexiglas, to protect their cashiers. As well, consumers may be reluctant to shop because of health concerns or lack of income.

“What unfortunately is happening is that the landlords are throwing the doors open and the retailers are not ready,” Mr. Sanderson said. “If a consumer walks in and sees most of the stores are closed, that is not a good experience. The consumer says ‘I don’t need to go back to that shopping centre. Maybe the store I wanted to go to is not even open and I wasted a trip,’” he said.

Retail landlords were facing increased competition from Amazon and other online retailers. The pandemic has forced more consumers to shop online, a trend which could remain permanent when malls and other physical stores reopen.

Brookfield Asset Management, which owns more than 170 malls in the United States and has some retail operations in its Canadian office buildings, is trying to mitigate its risks. It plans to spend US$5-billion to prop up certain retailers in exchange for a stake in the company, which could help some survive the brutal slowdown in sales.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error

Editorial code of conduct