Following the lifting of the majority of the coronavirus restrictions in July, the June quarter commercial rent collection rates have continued to climb. This was despite the quarter seeing the lowest due date collection rates since the start of the pandemic.
The Covid-19 Rent Collection Impact Report from Re-Leased shows the level of rent paid across the different commercial sectors by day 60. Overall, 69% of rent had been paid by this point, which was an increase on the 13% paid on the 24th June 2021 due date.
The day 60 figure for the June quarter commercial rent payments was a slight rise on the 66% paid by the same point in the March quarter.
Tom Wallace, CEO of Re-Leased, comments: “Despite the lifting of all coronavirus restrictions over a month ago, the impact of more than a year of lockdowns is still clearly being felt. Whilst we can see some encouraging signs in the industrial sector, retail remains stagnant, and office rent collection has taken its biggest hit since the first wave of the pandemic.
“This likely reflects the on-going uncertainty on the return to the workplace, however, landlords have reason to be optimistic for a bounce in the next quarter.”
Retail sector rent collections improving
The June quarter commercial rent collection rates across the retail sector show a marked improvement on the previous two quarters. Even though there was an extremely slow start to the June 2021 rental payments, with only 8% paid on the due date, this increased to 67% by day 60.
The March 2021 and December 2020 quarters saw 10% and 17% of rent paid on the due date respectively. This rose to 59% and 61% at the 60-day mark. The June 2021 60-day rate is up 18% compared to the same time last year.
However, the retail market continues to be the poorest performing sector and rent collection rates are down 10% on the figure of 78% collected for the December 2019 quarter.
June quarter commercial rent collection remains stable for industrial market
The rental payments for industrial assets continue at almost the same rate as the previous two quarters. From 16% of payments made on 24th June due date, there was an increase to 76% by day 60. Compared with the same quarter in 2020, this is a rise from 72% of all rent collected.
Before the coronavirus pandemic, the industrial market had an extremely high level of rental payments. These assets have not seen the same level of resilience as office properties. However, there are signs that the sector is starting to get back on an even keel.
Office sector remains the most robust market
Throughout the coronavirus pandemic, office assets have stayed the most stable with rental payments.
There was a slight fall in the amount of rent paid by day 60 of the June 2021 quarter. From the 20% of commercial office rent paid on the due date, this rose to 74% after 60 days. This compares with 79% and 77% paid by the same point in the previous two quarters.
September has largely been seen as the point in which more office workers will return to their desks. This could lead to an improvement in commercial rent collection rates by the next quarter day.
Further drop in rent relief
There was another decrease in the level of rent relief requested by commercial tenants for the June quarter. By day 60 this stood at just 3.4%, compared with 4.3% and 5.2% for the March and December quarters respectively.
The industrial market saw the highest level of rent relief for this quarter, at 4.4%. Both office and retail assets fell from 3.4% at day 60 of the March quarter to 2.7% for the latest quarter.
Commercial Rent Arrears Recovery
Even though there are still restrictions on the use of Commercial Rent Arrears Recovery (CRAR), there are options available for landlords. The total number of days’ outstanding rent that is required before CRAR can be started remains at 554 days. The moratorium on lease forfeitures for rent arrears remains in place until 25th March 2022.
If you are struggling to collect your commercial rent or agree payment terms with your tenants, then contact the Commercial Property team at CEA Limited. Email office@cealimited.co.uk or call on 0113 532 8350.