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Thousands of businesses struggling to pay rent as Alert Level 3 fails to bring expected lift

One week into Alert Level 3, which was initially hoped to kick-start the economy back into gear, a continued lack of cash flow is resulting in thousands of businesses struggling to pay or negotiating rent. 

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Many are also trying to re-negotiate rental terms. Source: 1 NEWS

Krish Nair, owner of ohSO Cafe in Auckland, said sales had dropped about one fifth. It re-opened its doors for business a week ago.

“[Level 2] will bring in a bit more, but it’s not going to be normal, nowhere near,” he said.

While online sales are up 350 per cent, Retail NZ said its April sales were down 80 per cent from last year.

It’s something the organisation’s CEO Greg Harford called an “economic carnage”. 

“There are a number of businesses who just aren't paying rent at the moment, [although] there's a number who have managed to negotiate rent relief with their landlords,” Mr Harford said.

He said if sales were down 80 per cent, rent should drop by the same percentage.

Infometrics senior economist Brad Olsen said the move to Level 3 had not brought about the lift in spending activity they hoped for.

“There is that general resistance to go and splurge quite as much,” he said of Kiwis’ new shopping habits.

Mr Olsen said Kiwis were only spending about 6 per cent of what they were last year.

Meanwhile, the long-standing calls for the Government to step in with rent relief continues. 

A poll by the New Zealand Council of Retail Property found 75 per cent of tenants were taking up retail assistance in the form of reductions or total deferrals.

Chris Dibble from real estate company Colliers International said about 90 per cent of its tenants asked for some sort of rent relief.

“That's one of the biggest conversations we've had over the last five or six weeks is how much rent should tenants be paying and how much rent should landlords be accepting,” he said.

More job losses are also expected for the retail industry, with the number already at 7000.