A pre-covid high in rent collection rates, high levels of tenant retention and steady rental growth reveal a return to stability and resilience for the UK’s commercial property occupiers, the Tenant Health Index finds.
The THI shows the average rent collection rate across four main asset classes hit 96% in the 12 months to September 2024. This is back to 2019 levels and marks a significant rebound from the Covid pandemic fuelled lows of 2020, when landlords received just 50% of commercial rent in May 2020.
.svg)
The Retail sector, with an average rent collection rate of 96%, saw the strongest recovery among four asset classes, bouncing back from historical lows of 44% in May 2020.
Developed by Re-Leased, the THI assesses the stability of occupiers across the Industrial, Hospitality & Leisure, Office and Retail sectors. It found that tenant retention, the percentage of occupiers remaining after 12 months, stood at a healthy 80% during this period. This corresponds with earlier research findings from Re-Leased that saw a 69% growth in 3 to 5 year leases following a lease length decline during the Covid pandemic.
The UK’s average rent retention rate, which compares rent paid by retained tenants to the previous year, stood at a robust 86%. All four asset classes showed a positive variance between rent to lease retention. This indicates that retained occupiers are paying more rent as landlords capitalise on improving market conditions and increasing stability.
Tom Wallace, Re-Leased CEO said: “Our Tenant Health Index combines significant real time data to understand the dynamics of the UK’s commercial property occupiers. With rent collection levels hitting 2019 levels, it signals a robust recovery after a turbulent few years following the Covid pandemic and the cost-of-living crisis."
“We can see signs of stability in occupancy levels and a steady growth in rents, particularly in high-demand areas such as industrial. It’s also encouraging to see positive data in the Office and Retail sectors, with both still navigating structural changes.”
The Tenant Health Index comes amid evidence of improving market conditions for commercial property. In September CBRE reported that all property performance indicators had stabilised, while the RICS Q2 Commercial Property Monitor shows an noticeable improvement in occupier demand. Carter Jonas reports that business confidence is now in ‘growth territory’ with retails sales and labour market showing signs of improvement.
About the Index
The Tenant Health Index analyses three main metrics: rent collection, tenant retention, and rent retention it provides a detailed view of tenant dynamics. High rent collection rates indicate reliable cash flow. Strong tenant retention (the percentage of tenants remaining after 12 months) reflects long-term stability. Robust rent retention shows the preservation and growth of rental income. The TMI also looks at the retention variance, the difference between rent retention and lease retention. A positive variance indicates that retained tenants are paying more and landlords are seeing rental growth. A negative variance would suggest retained tenants are paying less and rental incomes are declining.
The Re-Leased platform captures live rental collection data directly from over 90,000 unique leases from across the country. The report looks at the United Kingdom picture and also provides segmented analysis across major property asset classes (Office, Industrial, Retail and Hospitality).
This report does not rely on surveys or secondary collections, and the data has been collected, anonymised and aggregated in line with the Re-Leased Terms and Conditions as at the time of publishing.
