Remit Consulting’s latest research into the collection of rent and service charges from tenants in commercial properties reveals that while the rate of collection of rents in the current quarter is broadly similar to those seen in the previous quarter, in certain sectors, rent payment rates fell in comparison and shows that 35-days after the December Quarter Day due date, payments by retailers were down around 5% compared to the same stage of the previous three-month period.
“In the office and industrial markets, we recorded rent collection rates of 89.8% and 86.8% respectively,” said Steph Yates of Remit Consulting.
“Drilling deeper into that data reveals that the rent collection from occupiers on business parks and out-of-town locations, along with those from specialist distribution and logistics occupiers, were even higher and, 35-days into the quarter, reached around 94%. These figures are not far off what we witnessed in the pre-pandemic REMark study of 2019.
“However, the situation in the retail market has deteriorated over the last three months and, after 35 days of the current quarter, only 45.9% of rents had been collected from high street retailers and just 31.6% of rents had been collected from pubs, bars and restaurants,” she added.
The research reveals that, overall, the figures for rent and service charge collection are following a similar pattern to that witnessed in the previous quarters of the pandemic, and suggest that, by the end of March, there will be a further shortfall in the income of landlords of around 20%.
Laura Andrews of Remit Consulting commented: “If the rate of collection of rents from commercial occupiers continues on its current trajectory, we can expect a total shortfall over the first twelve months of the pandemic of around £5.5 - 6.0 billion.
“The next Quarter Day will coincide with the anniversary of the first lockdown of the pandemic, along with the end of the Government’s moratorium of the eviction of commercial tenants for non-payment of rents due to Covid-19.
“With many businesses, particularly those in the retail and hospitality sectors, still struggling to pay their rent, the future is looking particularly bad for the High Street. With the end of the Government’s moratorium on the eviction of commercial tenants looming at the end of the quarter, March could prove to be a perfect storm for tenants of commercial property,” she added.
Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown in March 2020, working in conjunction with the British Property Federation (BPF), the RICS, Revo, the Agent's Advisory Group, and other members of the Property Industry Alliance (PIA) in a study of around 125,000 leases on over 31,000 prime commercial property investment properties across the country.