As the Covid-19 pandemic continues to impact businesses, Fisher German’s Head of Commercial, Duncan Bedhall, looks at the effect it has had on rent collection in the multi-let industrial property sector.
Fisher German and Vine Property Management together have a portfolio of more than 7,500 multi-let industrial, warehouse and distribution assets under management across the UK, and as such have been able to closely monitor the effects of the pandemic across two quarter days during 2020.
Concerns were raised in March due to worries about businesses cash flow as lockdown progressed. Nonetheless, it has been encouraging to note that following conversations between landlords and tenants, the emphasis has been towards co-operation rather than confrontation and as a result, we have seen better than expected collection rates UK wide.
The 'cash squeeze' was always likely to be more prevalent three months into the pandemic, and we saw in excess of 39 per cent of all charges due paid on time, rising to 59 per cent within seven days. At 14 days, the overall collection rate for this quarter sat at 64.43 per cent.
Progress throughout the remainder of the quarter is predicted to be strong and expectations are that the collection level will be at or around the 87.73 per cent for sums due in the previous quarter.
Our property managers have been working on site throughout and are now reporting up to 100 per cent occupancy in some areas, albeit personnel numbers may not reflect maximum utilisation of space at present.
Keeping assets safe and ready for re-occupation has been key to removing some barriers to returning to work and the benefits of this are now being seen around the country. We have not seen any substantial uplift in insolvencies or vacancy rates nationally, although we will be closely monitoring this throughout the remainder of 2020 and into 2021.
Our agents are seeing a good level of inquiries for warehouse/industrial space particularly for smaller units, and we are quickly agreeing deals on good quality units which are then proceeding to completion. However, the level of letting activity is significantly lower than normal, as would be expected in these difficult times.
On the whole, we are cautiously optimistic for the multi-let industrial property sector that we are so intimately involved in.
For those interested or involved in the multi-let market, we provide our clients with a detailed breakdown of rent collection data across the country and across all sectors. If you’d like to receive our quarterly newsletter, get in touch to find out more.