Nordic Credit Rating (NCR) said today that it expects Swedish property managers to face long-term challenges as office employees embrace working from home.
The COVID-19 pandemic has hit the hotel and travel sectors particularly hard and tenants continue to have difficulty honouring their leasing commitments, the rating agency said in a report. However, it added that as the pandemic wears on, managers of conventional office properties stand to see a change in industry dynamics as working from home becomes more prevalent.
"We expect that tenants will become more demanding and want more flexible solutions as employees see the benefits of working from home," said NCR credit analyst Mille O. Fjeldstad. "The longer we wait for a solution to COVID-19 and abide by social distancing measures, the more companies and employees will adapt. However, it is difficult to fully predict the long-term consequences of the pandemic."
In NCR's business risk assessment of property managers, the operating environment and the company's competitive position are key, the report says. Besides looking at the company's market and brand position and the credit quality of its tenants, NCR looks closely at its ability to maintain strong occupancy ratios, revenue transparency, and overall financial stability. The report concludes that increased demand for flexibility from tenants could affect several of these factors.
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Marcus Gustavsson, credit rating analyst, +46700442775, firstname.lastname@example.org