Record rents point to UK CRE recovery

Reporting in the Evening Standard, based on data from Remit Consulting, indicates improvements in the UK’s commercial property sector. The firm’s data shows that rent collection in the last quarter reached its highest level in the pandemic period, which is partially due to the easing of lockdown regulations in the country.

Data from their REMark Report shows that “…an average of 72.1% of rents due in the UK had been collected with seven days of the September quarter rent day, which covers payments for the three months ahead”. This includes rent for retail and dining establishments, bars, and warehouses. Comparatively, in the previous quarter, 66.5% of rentals due were collected by the same point. Retail rents were sitting at 68.8% (up from 62.3%) and leisure at 57.2% (up from 40.1%).

Good news…

This is in keeping with a general upward trend, the firm told the newspaper, “which is good news for investors and landlords such as pension funds and other institutions, particularly as the upward trajectory of payments from tenants is similar to the previous quarters of the pandemic.”

…but not all good

Despite the strength of this news, it’s not a unilaterally positive picture, as the data also indicates that this ‘record high’ is still considerably lower than pre-Covid levels. Altogether, since the start of the pandemic, there is a shortfall in rent from commercial occupiers amounting to nearly £7 billion – a considerable chunk for property owners and investors, including institutional investors such as pension funds.

Managing the fallout

The matter of the “missing rents” is something the industry and public service are keeping a close eye on. This report from the International law firm Morrison & Foerster LLP gives an excellent rundown of the public consultation that the UK government has done around trying to establish a way forward for both struggling commercial tenants and landlords.

The policy paper published in August 2021 can be found here, and outlines the government intentions to “legislate to ringfence rent debt accrued during the pandemic by businesses affected by enforced closures” and their intent to formalize a “process of binding arbitration to be undertaken between landlords and tenants”.

Meanwhile, a number of the large and influential property industry associations have called on the government to end the moratorium on evictions that came into effect during the height of the pandemic and lockdown measures.

Trending: Outdoor Dining Space as the New Restaurant Must-Have

2020’s pandemic-shaped outlook posed challenges to all areas of business. From office to industrial, no one escaped this year’s disruptors unscathed.

One of the worst-hit commercial sectors has undoubtedly been the foodservice industry. The restaurant scene was utterly surrounded by opposition to business success. Market closures, changing consumer sentiments, and fears of highly contagious diseases ravaged the restaurant industry all across the country.

However, restaurants are resilient. Despite the mounting challenges, this business was able to stay above water and keep pushing ahead. It’s true that not everyone made it – but many did, and it was thanks to innovation and savvy pioneering of the new normals.

The Decline of Indoor Dining

One such COVID-minded adaptation to the restaurant model was a major decline in indoor dining.

Enclosed spaces with a constant influx of guests stood as a noticeable red flag for restaurant operators striving to keep their guests safe without disrupting business. High-traffic means high-risk, and the lack of circulation paired with close proximity – both of which are inherent to the indoor dining experience – are not being viewed in the positive light they once were.

In the past, guests flocked into indoor dining rooms without a thought. After all, rubbing elbows with other restaurant patrons was viewed as a natural aspect of being out. But, as we examine these habits in light of the recent pandemic, this behavior is reckless and even irresponsible.

For both restaurant operators and guests, indoor dining is being de-emphasized at large.

Putting Emphasis on Socially-Distant Eating

When indoor dining began falling out of favor, the restaurant scene shifted into a new set-up to replace the lost amenity for their guests. The restaurant space began heavily relying on social-distancing service, including outdoor seating and a reconsideration of space.

Inevitably, this reinvention of the most popular dining model will require renovations to CRE’s physical spaces. Re-designs, new acquisitions, and layout changes are pending for many restaurants across the country.

In terms of restaurant chains, Burger King is setting the example by spearheading their restaurants with COVID-conscious designs, including touchless service and an absence of indoor dining.

McDonald’s, KFC, California Pizza Kitchen, and TGI Fridays also have similar plans in the works – further demonstrating the momentum of this new trend.

Space and Outdoor as the Winning Combo for Eateries

If the majority of restaurants had a seamless network of open-air dining areas and touchless access, the foodservice industry may not have been impacted so heavily by the pandemic. But, since these now-pivotal safeguards were not in place, too many eateries struggled under the pressure.

As we move forward, restaurants will be thinking ahead and preparing for the worst by integrating valuable strategies into their normal procedures. A new evaluation of space and outdoor eating options will set up restaurants for success – no matter what lies ahead.

In the past, the generic image of a restaurant may have been a small cozy indoor scene… but that’s all expected to change as the restaurant business applies the lessons learned during 2020 into their baseline operations. The new restaurant is looking like it will revolve around open-air integration and strategic spacing.