The pandemic effect on Commercial Property Management
— 13 May 2020 14:12:11 by David Renaut
The vibrancy of Brighton & Hove owes a lot to the wide variety of its independent retailers and restauranteurs. It is very strange to see so many shuttered and unoccupied both day and night. However, most of the tenants in our commercial management portfolio are finding a way to meet their rental obligations, aided by rent deferrals and other concessions. In many cases their landlords are facing similar financial pressures but without the depth of support the Government has put in place for the retail and leisure sectors. An example of this is that a restaurant which has been forced to close will be able to benefit from the rates “holiday” introduced for the 2020/21 financial year but if it was empty before the lockdown, the landlord will be expected to pay the full rate liability until it is relet. The current restrictions and longer term need for social distancing will clearly make that difficult.
Similarly, tenants in the office and industrial sectors are not able to benefit from any of the rates-related assistance. They are only able to pursue the loan options that, anecdotally, are not a certainty and impose additional financial burdens on the business overall. The forced transition to remote working for so many could see a fundamental change in the operational structure they adopt as we return to “normality” and could have more far-reaching implications for the city’s property market.
As constraints to business are relaxed, they are likely to be measured and incremental. We have managed to find compromises that meet the expectations of most of our landlords and tenants as far as the March quarter rents are concerned but it is surely too optimistic to think that this crisis will be behind us by the time the June quarter payments are due. Both sides will have a clearer understanding of the impact it is having on their respective positions but I suspect that their ability to “share the pain” will be put to a tougher test next time around.
For Commercial Property Management advice, contact David Renaut, Partner & Head of Property Management.