Regardless of the economic climate or prevailing trading conditions in any one locale or at any one point in a lease’s lifespan, proactively seeking the advice of a qualified property professional who is always active in that local market is sure to pay dividends, argues Michael Beardall of the professional department of Barker Storey Matthews now part of Eddisons Huntingdon office.
Rent reviews & lease renewals: To get ahead, get an agent
To a lay audience, it’s very obvious that a property agent has a role to play at either end of a lease. However, the most astute of parties in property transactions – be they landlord or tenant – know they can call upon our profession’s services at any time in the lease cycle.
Lease negotiations touch matters of law and so they are, by default, adversarial. Being armed with an expert, evidence-based view is advisable and invaluable before entering negotiations. When it comes to matters of rent reviews and lease renewals, the best evidence is to be found right on the doorstep of the property itself.
It is crucial that evidence, whether for landlord or tenant, must be based on local market conditions. These can vary in any location in one district or, indeed, even from street to street in any one town.
Underlying lease terms need to be scrutinised or they could prove detrimental in negotiations. Too many businesses focus solely on the headline rent or the basic terms of the lease but these rarely paint the whole picture.
Every property is different and is judged on its own merits by professional property agents. A case may be made and proven in either direction. Some will justify large increases, whereas others warrant nil increases or, if the lease allows, decreases.
In considering lease renewals and rent reviews and forming an expert view, commercial property professionals’ factor in rent-free periods, stepped rentals, options covering sub-leasing and service charge provisions as well as dilapidation and also lease type and tenancy obligations.
An understanding of such minutiae, a physical inspection of the property, combined with a detailed knowledge of a particular property’s characteristics and its position in any one local market that is based on real transactions – enacted contemporaneously – serve to put clients in the most advantageous position in negotiations for rent reviews or lease renewals.
Market analyses and databases compiled by third party sources can play their part but nothing beats boots on the ground for real time market insight. First-hand knowledge of the local market and the detail of contemporaneous – and historical transactions – are vital in negotiations.
This is where the experience of an active local agent comes in to its own.
Barker Storey Matthews now part of Eddisons Huntingdon office has recently acted under instruction in a number of instances where our expert input resulted in favourable outcomes for our clients.
For a landlord of an industrial unit in Papworth, Cambridgeshire there was a 14 per cent increase to the rent on the 1,500 sq ft unit. Conversely, for a tenant of a 50,000 sq ft unit in Huntingdon we made the case for, and secured, an 11 per cent decrease, where the landlord’s agent proved overly-ambitious in its rental demands.
In the market town of St Ives, a lease renewal saw us negotiate not only a 53 per cent increase in rent on a 50,000 sq ft industrial unit in the town’s main industrial estate, but also a significant longer lease term thereby improving the capital value considerably.
At a popular business park location in Huntingdon, we achieved a 25 per cent increase for a landlord on a 2,000 sq ft modern office building. Again, for a landlord client, we made the case to justify a 15 per cent rent increase on a retail unit in a secondary shopping location near St Neots.
Impartial, professional advice based on evidence and experience in these – as in all circumstances, across all professional sectors – does come at a price. Bear in mind, such advice may prove to be invaluable to the prosperity, or even long term survival, of a business should current favourable trading circumstances not endure.
Barker Storey Matthews now part of Eddisons has been identified by Estates Gazette as the most active regional property agency in the East of England for five years in succession (2013, 2014, 2015, 2016 & 2017) and as the most active agent in Cambridgeshire for the seventh consecutive year.
For further information, contact Michael Beardall or Thomas Campbell at Barker Storey Matthews now part of Eddisons in Huntingdon, tel 01480 451578 or through https://eddisons.com/