It has been a rather busy year for the property asset manager helping landlords plan the safe return for their occupiers. We spoke with Matt Clarke on the effects of COVID-19 and what has been learned.
When lockdown hit and the effects of the pandemic began to be felt on the businesses and organisations occupying our clients’ buildings, there was a flurry of activity for the property asset manager.
From managing health and safety concerns for landlords, and planning for a safe return to their buildings by their occupiers, through to compliance with lease covenants, rent collection and inspections, it has been a busy year for the property asset manager.
Whilst this has not abated, it is important during such unique times as these, to take a step back and reflect on what has happened.
We spoke to partner, Matt Clarke, about the effects of COVID-19 and what, with hindsight, we have learned from working with our landlord clients and their tenants, in recent months.
What effect is COVID-19 having on landlords?
Ever since the initial lockdown, we have been working with and advising our landlord clients, occupiers and suppliers on a variety of issues, from the effects of new legislation, to the latest guidance and how it applies to properties and portfolios across the UK (where there have been varying lockdown restrictions).
Of course, COVID-19 has put a great deal of pressure on landlords as tenants have received protection from forfeiture and winding up petitions under the Coronavirus Act 2020 – and rightly so.
However, the legislation protecting tenants is absolute and does not consider individual business circumstances. In some cases, businesses have remained open and trading, yet are not their paying rent and service charges, despite being able to.
This has adversely impacted landlords who, let’s not forget, also come in all shapes and sizes with differing commitments of their own – some with loans to service in order to retain ownership of the buildings occupied by their tenants.
Landlords are now moving away from quarterly in advance payments to monthly rents, and turnover rents are also being introduced to markets where they have not previously been experienced.
How is the role of the property asset manager evolving to respond to the changes?
Our property asset managers have become even more of an essential conduit between landlords and their tenants, facilities managers and contractors, working collaboratively with each.
As asset managers, COVID-19 has allowed us to better understand the positions of both landlord and their tenant, and the various issues affecting them. This enables us to agree a compromise wherever possible and help to keep businesses trading, all whilst being acutely aware of changes in legislation and government guidance and how it applies to clients and their tenants.
Before COVID-19, we would know about legislative changes in advance and be able to prepare for their implementation.
During these unusual times, we found ourselves glued to the television screen for each daily press briefing, to ensure we remain up to speed on the latest restrictions or changes to existing ones, whilst receiving numerous notifications from professional bodies on the latest guidelines affecting our landlord clients. It’s a busy, yet interesting time, and it is certainly keeping us on our toes!
What can we expect to see in the future?
The pandemic has reinforced the vital importance of the landlord vs tenant relationship. Those with closer working relationships will achieve better outcomes, and we have seen a positive evolvement in this area.
We can expect to see more use of turnover rents, particularly in the retail sector, where the landlord can take a reduced regular rental in exchange for a share in the turnover of the successful business.
Meanwhile, a question mark remains over whether rents will always be payable quarterly in advance in the future. It is possible that monthly in advance payments will remain an option within the market.
What tips would we want to give to landlords at the moment, to help them think more strategically about the future?
A discussed in many of our recent blogs, the future of the office remains unclear to some extent.
Now that we know that working from home does work, there is a question mark over whether we will we ever go back to a five-day working week in the office.
Will people return to the London or other major city commute, or will we see businesses take more of a hub and spoke approach their property needs?
Whatever happens, the requirements for office space will not disappear entirely – it will simply evolve, and this represents an opportunity for landlords to ensure that they respond the changing face of the office.
With the recent changes in planning policy announced in the Planning White paper, we may also see more town centre redevelopment opportunities, as retail buildings are repurposed or redeveloped to respond to housing need.
How can we help?
Our property asset management team gets to know the strategic business objectives of our landlord clients, working closely with them to understand their portfolios and their occupiers.
We get underneath the skin of their short, medium and long term goals, so that we can help to deliver property strategies which align with their needs, drawing on expertise from across our business as required.
What is your final message to landlords just now?
Prepare for change. Just because it has always been done a certain way, does not mean things are going to stay the same.
The property market has been experiencing incredible change over the last nine months and it is likely that this evolution will continue.
We can help you to evolve your portfolios to meet the needs of your occupiers in this brave new COVID-19-present world.
For more information about the issues discussed in this article, get in touch.