Source: Property Wire
Cloud-based commercial property management platform Re-Leased has revealed that 21% of commercial rents in the UK were collected by landlords on 25 March, this quarters’ rent date.
This marks a decline on the previous two quarters, suggesting the third national lockdown has caused the rate of rent collection to soften after seeing some positive growth at the end of last year when restrictions were lighter.
Re-Leased’s analysis is based on live rental collection data from over 10,000 commercial properties and 35,000 leases on its UK platform.
Tom Wallace, chief executive at Re-Leased, said: “The past year has tested the resilience of the commercial real estate industry like no other. It is clear from our latest figures that one year on, we are far from ‘back to normal’, with rent collection still below pre-pandemic levels.
“The burden of three national lockdowns and other social restrictions has placed substantial pressure on occupiers and landlords, many of who are now navigating dire financial circumstances. The debt pile continues to grow into the billions and the compound effect of five quarters of rent shortfall must not be underestimated.”
Caleb Dunn, commercial analyst at Re-Leased, said: “Rent collection performance continues to be a valuable barometer for business and occupier performance in the UK.
The level of rent collected on this quarter day is a direct response to the third lockdown, which once again has seen businesses respond to the harshest of restrictions. The last time the UK faced these levels of restrictions was during the first national lockdown, prompting record low rent collection for the June quarter.
“It is therefore promising to see that, while figures for this quarter are indeed lower than the last, they are up by +3% when compared to June. This shows resilience has improved – and demonstrates that landlords and occupiers are better prepared to deal with the implications of a lockdown compared to a year ago.
“As we continue to open up the economy in the coming months, there is every reason to expect a rebound for the June quarter. However, despite some cause for optimism, looking ahead to the end of the year, we expect there will be more pressure to come with vacancy rates, rental values and lease terms all set to see noticeable shifts.”
Behind the overall UK picture, each sector is responding differently to the crisis. Retail continues to be hardest hit; the sector has recorded the lowest rate of collection this quarter at 15%. Offices recorded the strongest rate of rent collection at 28%, however this sector has slowed compared to the previous two quarters. Industrial has emerged the most resilient sector and is the only one to see an increase on levels recorded a year ago, at +3%.
Behind the overall UK picture, there are also significant variations in rent collection across the country. A breakdown of the UK’s 10 regions revealed that the East Midlands is the most resilient region this quarter, while the South West is the least resilient.