GPE warns of potential recession from Covid-19 crisis

He insisted however that London offices have a future despite industry concerns occupier demand could suffer as people embrace working from home.

‘Whilst much of the year to March 2020 was characterised by political and economic uncertainty, nothing could have prepared us for the social and economic consequences of the COVID pandemic,’ said Courtauld in a statement announcing the company’s full-year results.

‘As we examine the implications for our business, it is clear that we must plan for a recession with an increase in unemployment, leading to reduced occupational demand for space, implying falling rental and capital values.

Key to our market's performance will be both the depth of the downturn and the shape of the recovery. Given this uncertainty, we are pausing the provision of guidance on rental value movements until the picture becomes clearer. Whatever the outcome, whilst some working practices might change, our human desire to congregate and create underpins our belief that London's magnetic appeal as a global business capital will persist for the long term. This belief is reinforced by our current leasing discussions, illustrating occupiers' ongoing appetite to secure high quality, sustainable space.’

In its full-year financial results, GPE reported the value of its estate slipped 0.3% to £2.6 bn in the year to March, dragged lower by a 3.5% fall in retail property values. The company posted a sound result of £57 mln in EPRA earnings, up 6.1% on a year earlier.

GPE’s management expects the next two collection days in June and September, to be worse than the 71% currently recorded for Q2 rents. 20% of the rent roll is expected to move to monthly payments, with good levels of tenant engagement recorded on the whole.

There is no strict timeline for the 11.3% of rental payments that have been deferred, noting collection will be sought as soon as possible, but will depend on the length of the lockdown and the availability of landlords’ legal remedies (ie extension of moratorium). The largest tenant delinquency so far has been the retailer Cath Kidston, with positive inbound interest already for that shop.

Also on Wednesday, GPE announced it has pre-let 39,970 sq ft of office space in its development at 1 Newman Street and 70/88 Oxford Street to Exane as headquarters for its Exane BNP Paribas Cash Equities business.
The 119,100 sq ft development comprises 81,200 sq ft of offices and 37,900 sq ft of retail space and is anticipated to complete in Q3 2021.

Finally, the firm announced the launch of "The Time is Now", its sustainability statement of intent including plans to decarbonise the business to become net zero by 2030. Toby Courtauld, Chief Executive commented ‘The world of sustainability is complicated, but at GPE, our approach is simple. We will decarbonise our business and ensure our spaces are adaptable and resilient to climate change by 2030. We will create a lasting positive social impact, whilst putting health and wellbeing front and centre.’