British Land looks to retail parks as rent remains hit by Covid

One of the UK’s biggest commercial landlords has signalled a shift towards retail parks as it managed to collect just over half the retail rent it was owed for the last three months.

British Land said that it had collected 54% of rent from its retail customers that was owed for the period to the end of March.

The low rate was offset somewhat by its office estate, where 96% of renters paid what they owed, taking the average to 76% for the quarter.

It means that over the last year, British Land has only collected 82% of its rent, mainly because of the retail estate.

The hit to the retail sector over the last year has put some companies in dire financial straits, and spawned a slight shift at British Land.

Retail parks outside cities have been quicker to recover from the depths of the pandemic.

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It has meant that retail parks have been able to hold firm on their valuations, if not increase slightly, according to analysts from Liberum.

“We see a value opportunity in out of town retail, reflecting increased yields and a more stable occupational market, driven by affordability and stronger demand from retailers who recognise the important role that retail parks can play in supporting an omnichannel strategy,” British Land said.

It has therefore recently bought a £49 million site in Bedfordshire, which already counts Marks & Spencer, Next and Boots among its customers.

Liberum analyst Tom Musson said: “The acquisition of retail parks is a further indicator of interest in the subsector, particularly for smaller lot size assets.”

While British Land has not struggled to attract businesses to its retail sites – having more square metres filled than a year ago – it has been forced to lower rents in order to do so.

Deals are currently being struck around 20% below previous levels, British Land said.

Separately, Great Portland Estates revealed on Wednesday that it had collected 78% of the rent due in March, including just 44% from retail, hospitality and leisure customers.

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