Commercial Rent Collection Recovered In Q3 With Office Tenants As Top Payers

UNITED KINGDOM – Collection of commercial rents rebounded in Q3 2020 thanks to the re-opening of offices and non-essential retail shops, reported City A.M. on Monday afternoon (26 October).

According to Cushman & Wakefield (C&W), it had received 77 percent of rents owed to its customers on the 21st day after the third quarter’s due date.

The collection rate is 9 percentage points higher than the 68 percent of commercial rents obtained during Q2 2020. But it’s lower than December 2019’s figure of 95 percent.

The property consultancy said the rent collection for the third quarter was propelled by the re-opening of non-essential shops in June, the Eat Out to Help Out scheme introduced in August, & the government’s return-to-work campaign in September.

In particular, office tenants accounted for the largest proportion of paid commercial rents as they forked out 87 percent of the owed amount, followed by industrial occupants (77 percent). Retail lessees only paid 57 percent, but this is an improvement from the 45 percent seen during the second quarter.

“We can see clearly in our latest data that rent collection levels for the September quarter have been positively impacted by the reopening of non-essential retail and return to the workplace, all of which have increased consumer confidence and footfall,” said C&W’s Head of UK Asset Services Nick Ridley.

However, the return to the office was short-lived as the government reversed its return-to-work drive, and is now encouraging employees to continue working from home if possible. And this U-turn could negatively impact the office leasing market’s recovery.

“The return to work messaging in August was medicine for the offices sector, which is reflected in the quarterly spike in rent collection levels. However, we might see this momentum slow as the advice has switched to working from home,” added Ridley.