What Recovery Might Look Like Post- Pandemic

Irish Independent columnist Paul McNeive published an interesting interview with Michael McAteer, managing partner at corporate recovery and insolvency specialists Grant Thornton Ireland, this week. The interview focused on the post-pandemic recovery and speculated about what this might look like. The Grant Thornton chief forecasts a “two-tier recovery” for the country. When asked what advice he has for business owners and property business owners in particular, he emphasised the importance of having a strong balance sheet and cautioned businesses that business survival during trying times depends upon keeping the lines of communication open.

It is fair to say that Mr McAteer remains broadly positive about the prospects for most businesses, including those under particular pressure right now, such as retail and the hospitality sector. This positivity is based on the expectation that discretionary spending on entertainment will bounce back upon reopening, which is surely inevitable as people escape the confines of their front rooms and back gardens – it has been a long year. One surprising insight from the interview is the belief that most landlords will write off a year’s rental arrears in order to maintain the pre-pandemic rent levels. Certainly, some may well do this, but not all are in a position to even consider this. Also, there is a base assumption that – given a full year of rental relief – hospitality businesses will be able to resume business as usual. In reality, it might not be so straightforward. Some of the changes brought about over the past 12-months will likely have a more long term impact and not all businesses will have the business model to support this. The interviewee goes on to acknowledge that banks are less likely to write off these arrears, however, there may be some middle ground here for negotiation of terms. This comes back to the key advice about keeping the line of communications open between landlords, banks and all creditors. Mr McAteer cautions “Creditors get nervous if you stop returning phone calls”. This is where commercial estate agents may need to step in. In fact, Michael McAteer spoke about the “vital role” that estate agents will have to play in the recovery, post-lockdown and post-restrictions. 

Breaking down what Grant Thornton expects to be a two-tiered recovery, the second or slower to recover tier is likely to comprise businesses that will not be set up to resume ‘business as usual’, for example, some types of retail. It has become something of an overused cliché to say the pandemic has accelerated trends that were already in motion, but there is more than a ring of truth to this. In practical terms this has shortened the runway or length of time that some businesses might have counted on. The knock-on effect of this is the possible weakening of the security of existing leases. Again, this is where estate agents will need to step in to help mitigate the losses on both sides. Mr McAteer advises transparency in the negotiations with all parties to ensure trust and mutually-viable, long term solutions. This is good advice for any time, but critical in 2021.

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group