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Property Market Conditions Helping Tenants Do Better Deals- 07/10/2009
The current state of the commercial property market is helping tenants to achieve some excellent property deals, according to a leading Midlands’ commercial property solicitor.
David Lucas, an associate in the commercial property department of West Midlands’ law firm FBC Manby Bowdler, says that landlords are agreeing to improved deals to retain or attract tenants, in order to avoid paying rates on empty properties, and encourage blue chip tenants to continue in occupation of premises they may otherwise have vacated.
“Some tenants are coming to the end of leases of premises where trading has diminished as a result of the economic downturn. Landlords are seeing that by helping the tenants’ profitability now by granting relatively short leases with substantial rent free periods and often a break option, they are maximising goodwill within the landlord and tenant relationship which should benefit the landlord, as and when market conditions improve and trade at these premises increases, “says Mr Lucas, who is based in FBC Manby Bowdler’s Shrewsbury office.
“We recently advised one client with a large portfolio who has renewed a five year lease on a trading estate where the estate’s profile and number of tenants has recently fallen. The client secured a two year rent free period, which shows the lengths landlords are prepared to go to in order to secure a good tenant.”
Mr Lucas continues: “The best time for a tenant to take professional advice from both commercial property agents and experienced commercial property solicitors is before its existing lease runs out, to ensure that it either exits in the most economical manner and finds the right new premises or renews its lease on the right terms, whichever is most cost effective.”
However, according to Mr Lucas, some tenants can be blinded by what appears to be an attractive headline rent, or rent free period and fail to notice other conditions which may effectively trap them into a long lease.
He says: “It is vital that tenants takes professional advice to ensure that they get the lease length they want and do not agree to a longer term lease with no break clauses and with onerous terms on subletting or assignment.”