Office rent collection drops to post-lockdown low

Rent payments from office occupiers have hit their worst levels since the depths of the coronavirus lockdown in Q3 2020, according to new findings from Remit Consulting. Just 56.2% of office rents were paid on time by occupiers on the June quarter day (24 June), said the management consultant’s REMark report, which covers some 125,000 leases on 31,500 prime properties in the country. Within the office market, rental payments at properties in out-of-town and business park locations were 21.6% lower on the due date than standard offices. Remit said the disparity between the two subsectors underlined a “significant” trend that began 12 months ago. The industrial sector also performed badly, with landlords collecting 56.7% of the amount owed at the time. The retail sector, which suffered widely in the early stages of the pandemic, saw one of the highest collection rates at the start of the new quarter, with 70.4% of rents due being paid on time. Overall, 63.5% of rents due from commercial occupiers were paid on the June deadline. Researchers said the figure represented a drop of 5.3 percentage points year-on-year. Remit Consulting’s report also showed that 96.7% of all rents due on the March quarter day were collected at the end of the second quarter. Remit noted that, conversely, it reflected the joint-highest total collected for any quarter since the first national lockdown in the spring of 2020. Elijah Lewis, research consultant at Remit, said: “As we have seen throughout the pandemic, the slow collection of rents at the beginning of financial quarters is not uncommon. “However, in a reversal of the fortunes of the three main market sectors, it is the retail market which sees the most prompt payment of rent, while, in a trend that started 12 months ago, the office sector, which was consistently the most prompt in paying rent during the worst of the pandemic, now has the slowest payment levels.” Lewis said a separate report by Remit has found that the volume of staff returning to the office has plateaued during the first half of the year, with a national daily average occupancy rate of around 30%. “The data underlines that hybrid working patterns are now being widely accepted by businesses, leading to a reduction in the amount of office space needed by many companies,” he said. “It is possible that this reduced demand may be filtering through to slow rental payments.” To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews Photo © Edward Webb/Shutterstock