This article is from the Australian Property Journal archive
RETAIL rent collections fell as New South Wales and Victoria came out of lockdown with offices also impacted by the latest lockdowns.
According to analyses by Re-Leased, rent collection for the retail sector has been the hardest hit up to 30 October 2021, sitting at 75% nationally, down from 84% in May and June prior to the lockdowns.
Across all commercial property sectors on a national level, rent collected by day 30 of the month has slumped from a high of 85% in May and June, to just 80% in October as extensive lockdowns in Melbourne and Sydney have taken hold. Pre-pandemic in January 2020 and December 2019, this figure was at 86%.
Victorian retail rent collections felt the brunt over the last few months, falling to just 72% by day 30 of October, down from a yearly high of 82% in May before the crippling fourth, fifth and sixth lockdowns.
Victoria office rent collections also dropped to 72%, down from 87% in September, 86% in August, and 90% in July.
Re-Leased CEO Tom Wallace said this suggests conditions have started to bite hard for some office businesses this month after several lockdowns.
Similarly, NSW retail rent collection fell to only 67% in October, after a yearly high of 82% back in June before the state’s longest lockdown. Offices were also impacted at 87%, down from a yearly high of 92% in June.
“Although Victoria and NSW are coming out of lockdown with eased restrictions, falling rent collection figures demonstrates business has been hit hard. Landlords will be hoping the retail sector can bounce back quickly as their ability to operate is the biggest indicator of whether they are able to pay their rent,”
“Victorian office rent collection has also dropped significantly over the last month, suggesting repeated lockdowns have also started to bite for office-based business too.” Wallace said. “Unsurprisingly, retail has been hit the hardest, and we’ve all seen the crippling effects of lockdowns as businesses have been forced to close their doors.”
Looking overseas, rent collection has improved as economies reopen.
Ratings agency S&P said one of the global mall owner Unibail-Rodamco-Westfield has benefited from the reopening of all its centres during the second half of the year.
Since June 2021, URW’s centres across all regions have reopened, alleviating the significant constraints on operating performance during the first half of the year because of COVID-19-related mandatory closures across continental Europe and the UK.
Although some restrictions are still in place, such as capacity limits, the authorities have not imposed additional full lockdowns.
Footfall is picking up, and throughout the third quarter in most regions, levels were at more than 80% of the same period in 2019. Third-quarter tenant sales have also shown a robust rebound, averaging 93.1% of sales for the same period in 2019. This has yielded a reduction in vacancy to 7.9% in the third quarter from 8.9% in the second quarter 2021.
Rent collection also improved, reaching 88% in the third quarter from 80% in the quarter before.
