Lessors Offer Rent Relief As Gov’t Flip-flops On Back-to-Work Drive

UNITED KINGDOM – Two of the biggest commercial property owners in central London plans to provide further rent relief to tenants as landlords prepare to take another hit to their earnings, after the UK government made a U-turn in relaxing COVID-19 restrictions, reported Bloomberg on Wednesday (24 September).

According to sources who requested anonymity, Shaftesbury and British Land are considering extending help to businesses that will be impacted by Prime Minister Boris Johnson’s announcement to close bars and restaurants earlier starting on 24 September, as well as encourage workers to telecommute.

With the authorities imposing new measures to stop the spread of COVID-19, the country’s biggest commercial property lessors could face challenges in collecting rent for the third consecutive quarter.

For instance, sources revealed that Shaftesbury is permitting occupants of its commercial properties – like those in Soho, Covent Garden, and Chinatown – to delay paying the quarterly rent for the third consecutive quarter.

As for British Land – which partly owns the huge Broadgate office and retail project in the City of London – it’s expected to continue providing support to smaller shops and hospitality lessees, albeit no final decision has been made, separate sources have shared.

Bloomberg Intelligence Senior Analyst Sue Munden thinks that “the new restrictions will hit areas like the West End hard, particularly restaurants and bars dependent on high footfall from office-based workers or tourists.”

“This may limit their ability to pay rent, barring new support measures from the Treasury.”

So far, commercial property lessors in the UK have received around 68 percent of the rent due in June, based on figures published by Re-Leased on Wednesday. While it’s still lacking, it’s still higher than the 18.2 percent collected on the due date.

Meanwhile, major companies like PwC, HSBC, and Goldman Sachs have deferred plans to have more staff working in the office due to the government’s flip-flop on its back-to-work initiative, reported The Guardian on Wednesday (23 September).

Goldman Sachs, which allowed 33 percent of its 6,000 employees in the UK to work at its London office since mid-June, deferred plans to bring back more workers to its workplace, including those on a rotating basis.

Richard Gnodde, CEO of the bank’s international operations, told workers in a memo that the workplace will remain open to those “who need to be in the office”.

At HSBC, a memo was sent informing workers that the bank was temporarily halting the planned return of Phase 1 teams to the workplace, including at its UK headquarters in London’s Canary Wharf financial district. It said employees working in branches and those in call centres providing client support will continue to go to work, but most of the office-based personnel will telecommute.

As for PwC, its prior target was to have over half of its employees return to the office by end-September. But after the government’s U-turn, it scrapped those plans on Wednesday and expects that the majority of its workers will work from home “unless there is a clear personal or business need to be in the office”.