Re-Leased, the cloud-based commercial property management platform, has published its latest figures for the December Rent Quarter.

The new figures analyse rent collection in the UK up to the 23 February 2021, 60 days after commercial rents were due on the 25th December 2020.

The data reveals that commercial tenants in the UK have paid 74% of all commercial rents due for the first quarter of the year, down just -1% from the same point in the previous September quarter.

Propp – MPU

Taking a year-on-year view however total commercial rent reconciled reflects a decline of -10% at this point in the rent cycle.

Each sector is responding differently to the crisis and the figures reveal that:

  • The retail sector remains the hardest hit, collecting 68% of rent due, over -16% down on the levels seen a year ago.
  • Offices continue to prove resilient, reporting 77% of rents reconciled, seeing a small fall compared to the previous quarter.
  • Industrial assets have proven to be the strongest performing asset type at 81% rent reconciled, but still recorded a -9% decrease when compared year-on-year.

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.

UK Average and Asset Breakdown
Total Reconciled(as of day 60) Dec Qtr 2019 Mar Qtr 2020 Jun Qtr 2020 Sep Qtr 2020 Dec Qtr 2020
*Average 84% 67% 68% 75% 74%
Retail 84% 59% 60% 72% 68%
Office 81% 74% 76% 79% 77%
Industrial 90% 74% 75% 79% 81%

*Includes other asset classes with smaller sample sizes (commercial, leisure etc)

Tom Wallace, Re-Leased’s CEO, said:

“We are fast approaching the one-year point of the pandemic and our latest figures highlight that UK wide rent collection is still some way behind levels we were seeing a year ago.”

“Many landlords will have started the year with substantial rental shortfalls and debt obligations, which have now been compounded across four consecutive quarters.”

“The UK may be starting on its roadmap to more normalcy, but the impact of the pandemic on landlords has not been fully appreciated by government and with the moratorium looking likely to be extended this could present another blow.”

“While varying lockdowns have driven rental data to fluctuate though-out the year, it is encouraging to see a steady uplift across the commercial market to bring the December quarter to near what was reported in September.”

“The industrial and office sectors are leaders here and have shown clear signs of resilience throughout the year.”

“With lockdown restrictions set to ease in the coming weeks, all eyes will be on the recovery of the retail and hospitality sector.”

Since March 2020, landlords have forgiven substantial rent obligations, often through credit notes, highlighting where tenants have already made agreements for rent free periods.

Re-Leased’s data for the December quarter also shows that credit notes have tripled since the December quarter last year, highlighting where tenants have already made agreements for rent free periods. These stand at 5.2% up from 1.7% in December.

UK Average and Asset Breakdown
Total Credited(as of day 60) Dec Qtr 2019 Mar Qtr 2020 Jun Qtr 2020 Sep Qtr 2020 Dec Qtr 2020
*Average 1.7% 2.7% 4.7% 5.9% 5.2%
Retail 1.2% 2.8% 4.4% 4.3% 4.5%
Office 2.3% 1.7% 4.1% 4.4% 7.1%
Industrial 2.6% 5.3% 7.7% 9.8% 5.1%

*Includes other asset classes with smaller sample sizes (commercial, leisure etc)

Caleb Dunn, commercial analyst at Re-Leased, said:

“The pandemic has been a huge instigator for change in the real estate industry.”

“One-year on from the outset of the pandemic, our data is showing that credit notes applied across the commercial real estate market have risen by over 3% year-on-year.”

“We believe this to be an encouraging sign of the relationships between tenants and landlords improving and bringing higher levels of trust and communication across the sector.”

“Interestingly, the office sector has seen the highest jump in credit notes applied during the December quarter at 7%, indicating building owners may be looking ahead to tenants returning to the workplace in some form in the coming months.”

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