Only 10% of office space in use, says Land Securities

Office and retail landlord Land Securities has said less than 10% of its office sites are being used as people work from home.

Many companies are struggling to pay the rent, it said, with 63% collected within 10 days in March and early April compared with 94% a year ago.

Things may get worse next month when it comes to rent collection, it warned, as its clients struggle with lower sales.

Its comments came as it reported a £837m loss for the financial year.

Land Securities, which owns office space and retail developments including the Bluewater Shopping Centre in Kent, said the value of its investments fell as shoppers stayed away.

It said it anticipated that the shift from physical stores to online shopping would be sped up by the coronavirus outbreak, which has also hit sales for shopkeepers in general.

In the first half of April, British retailers suffered their biggest drop in sales since the 2008 global financial crisis, according to the CBI business lobby group.

Land Securities said it had established an £80m rent relief fund, “targeted at our customers most in need”.

Rachel Winter, associate investment director at Killik & Co, said that “at the moment the future of the office looks uncertain”, and noted that the company had “paused construction on a number of developments, particularly office space in London”.

In other retail news:

• Kingfisher, which owns DIY chain B&Q, said group sales in the first week of May grew 2.7% from a year earlier as shoppers turned to home improvements to pass time under lockdown. The bounce follows a 24% drop in the three months to the end of April after many stores shut.
• AO, which sells electronics and large white goods such as refrigerators, said it expected the shift to online sales since the lockdown began would be permanent. It added it had seen increased demand and sales across all categories.
• Supermarket Morrisons said sales rose 5.7% for the first three months of the year, although costs also jumped. It said that the overall impact of coronavirus “remains uncertain”.
• Garden centre chain Dobbies said it would open its 54 English stores on Wednesday after the government relaxed its rules on what retailers should open. Only a limited number of customers will be permitted at a time, it said.