British Land’s share price falls as occupancy rates dip
British Land's share price fell today after it said that its occupancy rates have fallen, with tenants signing up for shorter leases.
In its third quarter trading update, the commercial property giant reported a 97 per cent occupancy rate, with an average lease length of eight years. However, this compared to an occupancy rate of 98 per cent and an average lease length of nine years in the first half.
British Land's share price was down 3.5 per cent at the close.
Chris Grigg, British Land's chief executive, said: "British Land has had a positive quarter reflecting a strong positioning of our portfolio and our engagement with occupiers and consumers…We remain mindful of potential headwinds going forward."
Read more: British Land posts a loss as Brexit vote hits asset values
The property company said it had made retail lettings and renewals on 314,000 square feet of space, and had achieved rental rates which were on average 8.7 per cent higher than the estimated rental value.
The group also hiked its third-quarter dividend by three per cent as compared to the year before, to 7.3p.
Michael Hewson, chief market analyst at CMC Markets UK, said that British Land's trading update showed that "demand for rental property remained resilient, even in London, despite all of the concerns around Brexit which have hammered the sector since June last year.
"Investors may have been spooked by a slight dip in occupancy rates which has seen shares in Hammerson slide back as well," Hewson added.