Most tenants complied on time with their contractual obligations to owners of the office buildings managed by Colliers International in the first half of this year, even though in some cases the rented spaces remained unoccupied for some time, due to the state of emergency. Thus, the share of tenants who paid their debts on time remained constant, on average, compared to the same period from 2019, almost 90%, despite the effects of the pandemic on their activity, according to data from the property management division of Colliers International.
“Tenants of class A office buildings thus confirm the good intentions and practices in relation to the obligations they have assumed. Compliance with these obligations also comes as an effect of globalization, with companies belonging to international groups being able to continue local operations without problems as long as the parent companies have more easily withstood the effects of the pandemic. As part of their continuity plans, many companies have provisioned budgets to cover certain operational risks, so most have been able to operate with minimal impact on already contracted expenses, such as rents”, explains Alexandru Atanasiu, Associate Director Real Estate Management Services at Colliers International.
There are signals in the office market that contractual obligations, which include rent, utilities and service charge, will continue to be met and paid on time by tenants in the future, even though there are uncertainties about this sector and expectations that it will undergo major changes in the coming years, at least from the perspective of the balance between office work and home work.
Tenants of retail spaces located on ground floors of class A office buildings were, explicably, the most affected in the last period. This has resulted in a decrease in the number of retailers that have been able to comply with their contractual obligations towards owners of office buildings managed by Colliers International.
“In this case, we are talking especially about spaces that have been closed recently, which put pressure on tenants and reflected on the owners’ revenues from rents. As employees return to the office, differences in the number of retail tenants who manage to pay their obligations on time may also significantly attenuate”, says Alexandru Atanasiu.