Commercial rent collection figures for September’s quarter due date show that tenants are still struggling to pay, despite the easing of all coronavirus restrictions.
The Covid 19 Rent Collection report from Re-Leased / CREDIA analyses the rent collection rates the day after the September 2021 quarter due date.
By the due date, September 29th, only 19% of all commercial rent had been paid to landlords. This was a rise of just 1% from the previous quarter and a 2% drop from the March quarter. The data shows that the industry is far from back to pre-Covid levels and tenants are still facing tough financial decisions.
Tom Wallace, CEO at Re-Leased, commented: “Rent collection performance continues to give crucial insight into how businesses are weathering the storm of the pandemic. Average rent collection this quarter remains stagnant.
“With the furlough scheme coming to an end but the moratorium on evictions still in place, occupiers may be looking at how they can balance the books, and withholding rent could be the answer. Many will be making tough decisions, and staff wages will be prioritised to keep businesses open. It’s looking more and more like we may not see a full return to normal until the moratorium ends next Spring.”
Retailers struggling to make rent payments
The retail sector remains the hardest hit by the coronavirus pandemic. For the September 2021 quarter, only 11% of rent was paid by the due date. Rent collection rates for the industry are now at their lowest level since before the start of the Covid restrictions.
This is a decrease of 3% and 4% for the same period in the previous two quarters. For the September 2020 quarter, 13% of all rent for this sector had been collected on the due date.
Office rent collection rates stable
The office sector is again the top performing asset class for the September quarter. The rent collection rates for the due date were at 24%, which is the same figure as the previous quarter. Levels for this asset class are the closest to pre-pandemic levels and are at the same rate for this point in the December 2019 quarter. It is likely that rates for this sector will continue to improve as more office workers return.
Industrial sector sees improvement in rent payments
There was a 4% rise in due date payments from industrial tenants when compared with the same point for the previous quarter. 23% of rent had been received on the September due date, with 19% collected at the same point in June.
This is a 5% rise year on year, in comparison with the September 2020 quarter. Compared with the same point in the rent cycle for the December 2019 quarter, collection rates for this asset class are also just 5% down.
Northern commercial sector performing better than the south
When you examine the regional breakdown for commercial rent collection rates, areas in the north are outperforming the south. Due date rent payments for Yorkshire and the Humber were at almost 30% overall, with the North West in second at 25%. London had the lowest levels of rent collection for this quarter, with just 10% of all rent paid on time.