Landlords in the UK collected 21% of commercial rents on 25 March, this quarter’s rent date, according to cloud-based commercial property management platform Re-Leased.
The figure represents a decline on the previous two quarters, and this has been largely attributed to the third national lockdown, which is likely to have caused the rate of rent collection to soften following more positive growth at the end of last year when restrictions were lighter.
Re-leased has based its figures on live rental collection data from over 10,000 commercial properties and 35,000 leases on its UK platform.
Tom Wallace, the firm’s chief executive, 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 third lockdown has seen business respond to the harshest of restrictions, and the level of rent collected this quarter is a direct response to those measures in place. The last time the UK faced these levels of restrictions was during the first national lockdown, and this was met with record low rent collection for the June quarter.
Dunn added: “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.”
Each sector is facing its own battle amid the crisis, with retail continuing to be the hardest hit. Indeed, just 15% of retail rent was collected this quarter - the lowest of any sector. By contrast, offices fared better, with 28% of rent collected - more than any other sector. However, this figure for offices is still lower compared to the previous two quarters. The industrial sector has emerged the most resilient and is the only one to see an increase on levels recorded a year ago, at +3%.
Additionally, the data also points to significant regional variations in rent collection. The East Midlands was revealed as the most resilient region this quarter in a breakdown of the UK’s top 10, while the South West was found to be the least resilient.