At the 60-day point for the June quarter commercial rent, collection rates were at a similar level to the previous quarter. However, they still remain significantly down from the 60-day mark for December’s rent.
According to the latest data from Re-Leased, a commercial property management platform, overall rent collected by 24th August stands at 68%. This was up from the 18% paid on the due date (24th June).
This is still a 16% decrease on the 60-day collection rate for the December quarter. At this point, 84% of the overall rent had been collected. The same date for the March quarter rent saw 67% had been paid.
Tom Wallace, Re-Leased CEO, commented: “Over the course of the June quarter, rent collection climbed from a sobering 18.2% on due date to 68% by day 60, which is on par with March Quarter’s performance.
“Though unlike March – where organisations would have been operating as normal for the majority of the first quarter of the year – businesses across the UK felt the full force of lockdown measures for June. On one hand this shows there is a degree of resilience in the market, however, the shortfall in income for landlords over both quarters should not be underestimated.”
Retail sector remains the most affected
The 60-day figures for the June quarter commercial rent highlight that the retail industry has still seen the biggest impact of the pandemic. The figures for the third quarter run along similar lines to that of the previous one. On the due date for the latest quarter, only 14% of the rent was collected.
By day 60, just 60% of the total commercial rent for the retail sector had been paid. This compares to 59% for the same point in the March quarter. For the December quarter, 84% of the retail sector rent had been collected by day 60.
With rent collection rates for the past two quarters running at similar levels, this indicates that retail landlords are continuing to struggle. Retail tenants remain under considerable financial stress, with many unable to open for weeks and now facing serious declines in their footfall.
Office and industrial sectors continue to increase
For the third quarter, collection rates for the office and industrial property markets continue to grow. This highlights that businesses in these areas have seen greater access and a more ‘business as normal’ approach.
On the June quarter rent day, only 16% of industrial rent was paid. Throughout the first 60 days this continued to increase steadily and now stands at 75%. At the same point for the second quarter, this figure was 74%. However, after 60 days for the December quarter, 90% of all industrial rent had been collected.
In the office market, the figures are fairly similar. 76% of the total rent was paid by the 60-day point for the third quarter, compared to 74% for March. For the first quarter of this year, 81% of the rent had been collected by landlords at the 60-day mark.
Rent credits double
Though the collection rates for commercial rent are continuing to increase, there has still been a rise in the number of rent credits issued. The second quarter had already seen a record number of credits awarded by landlords compared to the two-year average. However, the overall figure has doubled for the third quarter.
By day 60, 4.7% of rent had been credited, compared to 2.7% at the same point for the March quarter and 1.7% for the December quarter. The industrial property market saw the highest number of rent credits at 7.7%. This was followed by the retail sector at 4.4% and offices at 4.1%.
With more time for landlords and tenants to prepare for the third quarter, these figures illustrate that landlords are willing to make concessions to ensure tenants remain in the property.
As the fourth quarter rent is due today (29th September), it will be interesting to see how the figures compare. This will be a useful indicator of how businesses are faring with the latest coronavirus restrictions.
More information:
Ban on commercial property evictions extended
Almost half of commercial rent paid within 30 days
June quarter commercial rent collections continue to increase