Office and Industrial Rent Collection Levels Recovering, Retail Lags Behind

The latest rent collection figures from commercial property management software company Re-Leased reveals a varied and fragmented recovery for Australia’s commercial property market.

The report, which analyses rent collection levels in Australia up to 7 September 2021, provides a snapshot of the impact of the latest lockdowns, which is explored for each asset class.

Across all commercial property sectors on a national level, rent collected by day seven of the month has remained above 60 per cent since May. This is a promising sign, as the market appears to have bounced back from the 40 per cent lows during the 2020 lockdowns.

Nationally, QLD landlords have received the highest payments (71 per cent), followed by those in NSW at 63 per cent, and VIC at 60 per cent.

Re-Leased’s data platform, CREDIA, collects and analyses data from Re-Leased clients, providing an accurate and timely reflection of the market in real-time. Re-Leased has access to key metrics such as rent collection levels, landlord subsidies and average lease lengths across the commercial property sector, as they are changing day-to-day. The Re-Leased data covers about 21,000 commercial properties across Australia, comprising about 45,000 tenancy agreements.

Rent collection for the retail sector has been the hardest hit, sitting at 57 per cent nationally. NSW has been particularly affected, with Sydney going back into lockdown in late June 2021. Rent collected has dropped since then, with just 50 per cent of rent paid on 7 September. This is down 16 per cent compared to the same point in June 2021, and continuing the decrease seen in July 2021 (58 per cent) and August 2021 (55 per cent). The sector has not seen such consistently low levels of rent collection since this time last year.

Tom Wallace, CEO of Re-Leased, said, “Although the NSW government has begun mapping out a path out of lockdown, falling rent collection figures are likely to continue in the short term.”

“As businesses navigate the latest lockdowns, their ability to operate is the biggest indicator of whether they are able to pay their rent,” he added. “Unsurprisingly, retail has been hit the hardest, while office rent collection has been picking up nationally as these tenants continue operating with staff working from home.”

Nationally, Office recorded the highest amount of rent paid so far in the first week of September 2021, sitting at 73 per cent. This is up from 70 per cent in August 2021.

“The majority of office-based businesses and their employees have adjusted to flexible working since the initial lockdowns and are now better prepared to continue operating,” said Wallace.

“This is showcased by the fact that Office rent collection is trending up beyond pre-pandemic levels. Lockdowns may prevent a return to pre-pandemic occupancy levels, but businesses look to have adapted well in the past 18 months.”

Industrial rent collection followed closely behind Office, sitting at 69 per cent a week into September. In general, Industrial rent paid seven days into the month has been consistently higher than pre-pandemic levels since May 2021.

“Industrial continues to be a strong performer nationally and has been a benefactor of the increased demand for warehousing and logistics facilities during the pandemic,” said Wallace.  

“This is a further indicator of increased business activity, and the upward trend will buoy landlords and investors.”