June quarterly retail rent collections plummet
Landlords have collected just 13.8% of rents due from retailers on the June quarterly rent day this week; this compares to 19.8% collected in March.
While more rents are expected to be collected in the coming weeks, the figures compiled by Re-Leased, the commercial property management platform, lay bare the impact the COVID-19 crisis has had on the retail sector.
Non-essential retail was permitted to re-open on 15 June having been ordered to close on 23 March meaning they had just two weeks of trading from stores in the past quarter.
Re-Leased’s analysis is based on live rental collection data from over 10,000 commercial properties and 35,000 leases on its UK platform.
Tom Wallace, Re-Leased’s CEO, said “For months, the industry has been speculating what the real impact of coronavirus will be on the UK’s property market. June quarter gives us the first real indicator of the severity of the crisis and quantifies the pressure both landlords and tenants are under.
"Looking at the level of rent that was collected on due date is sobering, but initial signs are not as catastrophic as some were forecasting. We expect rent collection to steadily increase over the coming weeks, but it is unlikely to reach the level that we saw in March.”
Other sectors proved more resilient for landlords with offices paying 22.8% of their rent and industrial businesses paying 16.2% of rents.
Data for the June quarter also shows that credit notes are trending higher, highlighting where tenants have already made agreements for rent free periods.
Wallace added: “We continue to encourage landlords to work as closely as they can with their tenants to understand what payments may or may not be possible for June but also the remainder of the year. Across all sectors, we have already seen landlords offering rent holidays, deferrals, and reductions where possible which is encouraging, but transparency is key. It’s crucial to remember that like tenants, landlords will be experiencing significant cash flow problems and have their own financial obligations to meet.”
“Looking ahead to the end of the year, we expect there will be more pressure to come. Vacancy rates, rental values, lease terms are all going to see noticeable shifts over the next six months. The temporary ban on evictions for non-payment of rent and the government furlough scheme is providing a lifeline to many tenants at the moment, but those measures will not last forever.”