Most tenants who took leases on commercial properties in 2006, 2007 and 2008 or who experienced rent reviews at this time are in a position to benefit from very significant savings in rent if they have a lease renewal or break clause between 2011 and 2013. By taking professional surveying advice, companies and sole traders are in a position to save up to 40% on their annual rents.
The reason for this is that strong occupier demand in 2006/08 resulted in commercial rental values and freehold values surging ahead. The more benign market conditions that exist today with weaker occupier demand is such that rents agreed in 2006/08 for virtually all forms of commercial property are more than the property would command today. Consequently, business owners if they are ‘savvy’ and ‘smart’ are able to secure concessionary deals if leases are coming to an end between 2011 and 2013.
Readers of recent articles on the state of the commercial property market will recall that Barnes Noble Edwards are predicting a shortage of some sizes and types of commercial property, due to so few buildings coming onto the market. Whilst there continues to be a growing shortage of available commercial properties, particularly in the industrial and warehousing sectors, demand for commercial property remains relatively quiet, although there are waiting lists for certain sizes of properties. Consequently new commercial occupiers today can still secure advantageous terms on a new lease. Occupiers whose leases expire or contain break clauses can also benefit from the same advantageous market conditions.
It is recognised that for many companies, the cost and upheaval of moving outweigh the benefits of a reduction in rent. However, often the threat of a tenant leaving can be enough to prompt a landlord to offer a lower rent on a lease renewal or even a capital sum for the tenant to stay. Barnes Noble Edwards are actively involved in advising a number of companies who are looking at this way of saving money on rent. Whilst the law relating to lease renewals and the vexing issue of dilapidations is complicated, Barnes Noble Edwards are specialists in this area and are able to offer impartial, professional advice on all aspects of leasing. For further advice call Andy Griffiths on 01536 517777 or email firstname.lastname@example.org
ANDY GRIFFITHS 20/05/11