We can all name a few Ibiza businesses that seem to be doing well despite 2020’s unique challenges. But we can name them using the fingers on one hand. For the vast majority the target is more one of survival than success.
At the weekend we hear of another small and independent but long established and popular leisure business closing its doors as that struggle for survival tipped the balance of it being worth the owners’ efforts to continue. The reason? A common one that we have heard many times already this year; that the commercial landlord would not budge an inch on the rental terms.
This comes days after the regional delegate of the Spanish estate agents association warns that there are already three times the number of commercial units empty in Ibiza and Formentera than normal, and that the market is set to get worse, and worse by some margin. Jeffrey Fernández says that rents are already down by 25% and the wise landlord will take offers at that price as they are only going down from there. But we are yet to hear of one of his ‘wise landlords’ in the commercial sector.
Whereas we have had plenty of reports of private residential landlords taking one for the team during these unique coronavirus crisis times, and offering rent free periods, rent reduction periods, and extended periods to pay, we have not yet heard one similar account from the commercial sector. Every time commercial rent terms have been mentioned this year it has been by one highly stressed and mystified tenant reporting on why their landlord will not see the obvious and unforeseeable trading situation they face, and asking why they will not give them just an inch that will save the mile they have worked hard over many years to create.
Ibiza’s commercial landlords seem to have little sympathy with the plight of their tenants during these unprecedented times. Why is this? Well people may have differing theories, but the only one that makes sense to us, business sense, is that they simply do not need the money. The vast majority of commercial property in Ibiza is owned by people who have owned it a long time, through a long period of Ibiza´s boom, and the theory is that they are, to put it simply, rolling in it, and would rather maintain the price point without any incoming rent than they would accept an overall reduction in rental prices for their properties. Perhaps this has balance sheet implications, who knows? But outside of their elevated circles you will be hard pushed to find anybody that would agree that the boom times for commercial properties will return anytime soon for Ibiza, at least outside of the most exclusive and desirable locations. The estate agents delegate says that secondary locations off the footfall of the main thoroughfares are set to become nothing more than storerooms, the lock up garages resulting from our Amazon buying culture.
Whatever the motivation or lack of shown by Ibiza’s commercial landlords, it is certain that few of them will need to be paying off lending on the property, the situation that applies to many of Ibiza’s residential landlords. Perhaps you can tell us of any commercial landlords who are bucking tough stance trend of the majority? But even if these few exist, we have not yet seen the end of Ibiza businesses that will close, but may not have needed to close, if they could have found just a little accomodation in this most peculiar year.