Leases: An Increasing Trend
12 Nov 2009
Last week I was in the middle of reviewing a title information document when a client called and exclaimed "Dal, I have just done the deal of the century! I've managed to negotiate a lease for my new business venture and the Landlord's agent has just agreed a 5 year term with annual break clauses, albeit with a slightly higher rent." My response was "Well done, but I think it only fair to tell you that I have just completed 2 of those type of deals in the last 2 weeks".....silence.
The fact is that those with empty premises or the potential for finding themselves with no tenant are now more willing than ever to sit down and come to an arrangement with their existing tenant rather than face the prospect of an empty unit, loss in value of rental on adjoining premises and having to pay empty premises rates. There is an ever increasing number of break clauses hitting the office, high street or even shopping centre lease, whereas less than five years ago the tenant would have had to be in a fairly strong bargaining position for a Landlord to even consider a tenant only break. With what seems to be a hardening attitude from some of the mainstream lenders to provide finance for business premises and the uncertainty in values, the business lease has come on leaps and bounds in the last six months and there does not seem to be any sign of a let up.
It would appear that now is a better time than any for those budding entrepreneurs to test the water with those wacky business ventures, incorporate a break or two into a five year term and possibly get a concession on a fit out from a Landlord. If it takes off, then great, if not, then we live to fight another day.
Dal is a partner in charge of our commercial and residential property departments. Dal is available on 01892 502324 or djaswal@bussmurton.co.uk