With the UK economy continuing to stabilise and grow, the commercial property market is also seeing sustained and increased activity.
For the last few years tenants with sufficiently long leases have been happy to keep their heads down with minimal landlord contact, readily agreeing a nil increase at rent review. Likewise landlords have been only too keen to re-gear existing leases, keeping tenants committed to premises for a longer period of time. However it is clear that there has been a shift in power, with landlords now able to agree lease terms with a greater selection of potential tenants on a robust commercial basis.
The Royal Institution of Chartered Surveyors (RICS) confirm that demand for commercial property continues to outgrow supply and has done so for the last few quarters. The market is fluid and competitive with stagnation becoming a distant memory. Landlords are back in the room!
However, now is not the time for either the landlord or the tenant to throw caution to the winds and commit to something which seems too good to be true. A commercial tenant looking to start or expand their business should still seek advice from surveyors and other professionals.
A landlord should still carry out thorough due diligence before permitting a new tenant to take occupation of its premises, or when buying a property subject to an existing lease.
Relationships change over time and despite the bonhomie between landlord and tenant at the outset when the terms of the lease have been agreed, it is important to ensure that there is a document in place that would survive a stress-test at major lease events such as rent review, a break right or assignment.
Many commercial property participants are riding the wave at the moment. The advice has to be to keep a fixed eye on the horizon so that it is clear when the crest is approaching.
At BLB Solicitors we are happy to assist and advise on any commercial property issue. For further information please contact Richard Bowater
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