Retailers paid less than half of rent payments expected in April. Discussions with owners of large Texas portfolios reveals that tenant payments for retail are off sharply. Collections for malls are running at 30 to 40% of what was expected. Other types of retail seem to be collecting 50% of payments expected.

This bodes poorly for the retail real estate and the retailers. Owners of apartments and office buildings report that April 2020 rent collections are trending to 90 to 95% of what was expected. Failure to make a rental payment is a serious breech for a commercial lease. Most landlords can accelerate and demand the balance of the payments due and legal fees.

Businesses are cash-starved across the US as businesses wait for the PPP loans to fund. Businesses are paying employees first and vendors second. It is quite telling that businesses in offices are secure enough in their future to pay. However, half or more of retailers are effectively admitting there is a limited chance they will survive.

It appears the normally languid pace of creative destruction will be thinning the herds of retail in particular but of all types of businesses. Many of these retail concepts have been on life support for years, including department stores and a variety of other retailers.

Creative destruction is powerful and unsentimental. Consider how quickly Netflix dispatched Blockbuster. Millions of business closures will accompany the 30 mm projected job losses. Job losses in the first three weeks totaled 17 mm.

Covid-19 will close 10 times the number of retail locations as we normally see closed in a year. There will be a massive need to repurpose this real estate. Much of it will no longer be retail. To learn about Texas Property Tax Trends, visit: