The COVID-19 Regional Rent Collection Report has been published by Re-Leased – a commercial property management platform. It analyses the collection of commercial property rent across a number of countries, including the UK.
The UK data examined over 10,000 properties and 35,000 leases using live rental collection information. This creates a highly accurate and timely picture of the commercial property sector during the coronavirus pandemic. They have used the data from the March quarter rental payments and segmented the analysis across the various sectors, including office, industrial and retail.
Decline in commercial property rent collection
The research highlights that 60% of the rent due for office properties had been collected by 10 days after the March quarter date. Over the past two years, the average for this period is 66%, creating a decrease of just over 8% at the start of the Covid-19 lockdown.
The retail sector however performed significantly worse. Only 48% of the due rent for the March quarter had been collected by landlords after 10 days. This contrasts to a two year average of 75%.
There were already significant cashflow problems within this sector prior to the government’s social distancing guidelines. It is expected that this market will be hit hardest by the coronavirus lockdown and some brands may not survive.
Across industrial sites, there was also a large drop in timely rent collections for the March quarter. Landlords had received just under half of the expected rent payments 10 days after the due date. This compares with an average of 65% across the last two years.
Commercial property rent collection – regional variations
The report highlights the differences across the country in the number of businesses who are behind with their rental payments. It ranks 20 of England’s largest cities and towns based on the overall percentage of commercial property rent collected 25 days after the March quarter due date.
Liverpool saw the biggest overall decline in commercial property rent collection, with a 50% decrease due to the coronavirus restrictions. There were also substantial falls in Central London and Milton Keynes, which both had a 40% drop in timely rental payments.
The data shows that the most resilient city is Cambridge, with just a 7% fall in rent collection for the March quarter. The average across the whole of the UK was a 30% drop in collection rates.
Another of the locations most resilient to the Covid-19 lockdown is Bristol, which only recorded a 9% decrease in rent collections. These were the only two areas that saw a fall in rent payments below 10%.
Declines in some of the country’s largest cities were:
Birmingham: -18%
Manchester: -21%
Leeds: -27%
Tom Wallace, chief executive of Re-Leased, said: “Behind the overall UK picture, there are significant variations in rent collection across key regions and cities.
“However, while some locations have proved more resilient than others, our research shows that landlords across the country are seeing concerning drops in rent receipts because of coronavirus.
“Many will be facing serious financial pressures as a result of these declines. Even a fall of -7% is a considerable adjustment to factor into your cash flow.”
He added: “Landlords need to work as closely as they can with their tenants to understand what payments may or may not be possible during these difficult times.
“These conversations will be particularly important as we get closer to June quarter date next month.
“We also encourage tenants to pay what they can afford, to help mitigate the financial strain landlords are now facing.”
More information
Changes to Commercial Rent Arrears Recovery (CRAR) during coronavirus
COVID-19 and support for commercial landlords
Commercial rent during coronavirus crisis – FAQs
COVID-19 effect on UK businesses
Rise in restaurant and pub insolvencies before coronavirus pandemic