ing landlords into it and even legislating rent abatements. Now though, it seems like it’s back to business as usual. Why this hasn’t occurred The trouble is that leases turn over on a gradual basis, somewhere between 10-20 per cent of leases in a shopping centre every year, depending on the country and what kind of shopping centre it is. So unless there is a deep and sustained problem in the background that’s lasting for more than a couple of years, most rents will not reset.  The pandemic simply didn’t last long enough and consumer behaviours didn’t change enough for that to happen. There was a temporary panic, which enabled large retail chains to exert pressure on their landlords to drop rents or face store closures. That window opened and snapped shut quickly. The impact of Covid-19 on rent has nearly washed through the system already. It also isn’ta phenomenon unique to Australia. Even in the supposedly over-malled US, Indianapolis-based Simon Property Group, among the world’s largest shopping centre companies, has easily shaken off the threat of rent resets.  At the end of the second quarter, the company’s latest reporting period, base rent per square foot across its US mall and factory outlet portfolio stood at about $36 ($390 per square metre), which was 3.1 per cent higher than last year, and about the same percentage above what it was in mid-2019.  The disruption caused by the pandemic didn’t last long enough for average rents to come down from a ridiculous run-up in the years prior. All the pandemic did was cause a bit of a breather, which took the form either of a plateauing or a small dip. Then, at the first sign of normality, it was off to the races again. Meanwhile, occupancy didn’t budge much: it now stands at 94.7 per cent after dipping only as low as 91.8 per cent in mid-2021. Simon has a portfolio of 17 factory outlet centres in Asia, of which 10 are in Japan. Occupancy in Japan remains above 99 per cent, so the centres are fully leased. Average base rent has increased every year, unperturbed by the pandemic and the fact that the country’s borders were sealed for a few years. Like Simon Property Group, major landlords across Southeast Asia have been reporting strong leasing activity, sharply rising rental income and high occupancy. Retailers are paying higher rents but are benefiting from higher foot traffic. Vincom and Central Retail In Vietnam, for example, Vincom Retail, the country’s largest mall operator, reported 1H23 leasing revenue up 7 per cent on no change in gross floor area. Citing data from CBRE, Vincom explained that asking rents in the Hanoi and Ho Chi Minh City CBD’s have increased by 13 per cent and 9 percent respectively in the first half of this year.  Rental growth took a breather through 2020-21, without falling materially, and has since powered ahead in the past 18 months. For Vincom, 80 per cent of its rent is fixed, and not at the mercy of the ups and downs of sales growth, another sign that landlords didn’t give up much ground to retailers in terms of their leasing structure during the pandemic. Meanwhile, in Thailand, Central Retail is reporting similar results: its rent and services income was up 23 per cent in the first half on a year-on-year basis. Other landlords in the region are chiming in with similarly positive stories. Key lessons Now that most of the pandemic effects on commercial real estate have trickled out of the system, we can start to draw some of the lessons. 1. Consumer behaviour changed, but it didn’t change enough to make a permanent difference to retail property: Stores are still where most of the action is and the numbers prove it. That is highly unlikely to change, despite a campaign to the contrary by those with an agenda to advance. This campaign, in essence, can be thought of as a territorial raid: an attempt to shift wealth from the property sector (part of the ‘old’ economy) to the technology sector (the ‘new’ economy). 2. Don’t confuse short-term, temporary shocks with long-term structural changes; Avoid confusing temporary phenomena with a change in the underlying structure of an industry. Business owners will not make optimal investment decisions if they falsely believe that a short-term shock is in fact a permanent state of affairs. 3. There has been little or no permanent shift in the relative market power of retailers versus landlords: Many observers romanced the idea that the pandemic would bring down commercial rents substantially and permanently. For the most part that was wrong. There were others who said the pandemic would be the kiss of death for retail property and that retailers would be in a much stronger position to negotiate terms. Wrong again. Some large retail chains did successfully use the brief opportunity to renegotiate rents, but it did not represent a permanent shift in market power across the board. 4. Retail property came out relatively unscathed, while office property appears to be in some trouble: While the recovery of retail property and the vibrancy of physical stores is now plain for all to see, new hybrid work arrangements are causing havoc for office property and for office tenants that are contractually obligated to sit on more space than they can use. Retail faces no such issue, or at least no fresh issues that weren’t present before. The final lesson is one that we have learned continuously, and we just re-learned it again: retail property can survive and thrive so long as it is well managed, and can adapt. People are social animals, and the much maligned mall is where they want to be.