By Paul White, director, Garness Jones
When the country was hit by the pandemic back in 2020, all businesses were affected – and of course there was a huge impact across the commercial property market.
Landlords were forced to reduce rents and become flexible over payments to support their struggling tenants, as we collectively faced long periods of lockdowns, restrictions and financial uncertainty.
Over the past three years, as we all hoped, there has been a steady but continual recovery.
And, as commercial property agents who deal with hundreds of transactions across Yorkshire and Lincolnshire each year, we can say with confidence that in our region, the market is now once again performing very well.
However, whilst the market has righted itself in terms of demand for commercial property space, leases and rents have not always followed suit.
This has led to significant inconsistencies, with many agreements now no longer reflecting the reality of the present climate. It’s a situation we are helping landlords address through our specialist lease advisory services.
Leases and rents ‘not reflecting current market’
“We’re seeing a buoyant market at present in which there are not many business failures, so therefore we are seeing less turnover of tenants in commercial properties,” explained Paul White, director at Garness Jones.
“In a strong market, it is essential that lease and rent agreements have been reviewed and updated to reflect that position, and we have been finding that in recent times, many have not followed the market recovery.
“In our work we are involved in hundreds of property transactions across the region each year, which gives us a unique insight into the data and evidence to be able to advise landlords over lease renewals and rents, and we can say that many are not currently reflecting the present market.
“There’s inconsistency in almost every area, and with regards to almost every type of commercial property, be that offices, retail, leisure or warehousing.”
Lease reviews can help landlords and tenants
Mr White says lease reviews, conducted by professional chartered surveyors, can result in positive change for both landlords and tenants, and improve relationships going forward.
“If you’ve not reviewed your commercial property leases or rents recently, it would be worth doing so now, as I’d say it’s most likely they need to be changed in some way,” added Mr White.
“Lease renewals are a vital element of successful commercial property management as they provide the opportunity to adjust rent levels, and of course, this is always best done gradually, rather than suddenly finding you’ve fallen way behind the market rate.
“No tenant is going to appreciate a sudden hike in rents, even if they are told that’s not reflective of the market value of their property. A lease review provides the opportunity to negotiate agreeable terms, agree gradual rent increase and to introduce new clauses and other agreements which can benefit both parties.
“Ultimately, renewing leases on a regular basis allows landlords to strengthen their relationships with their existing tenants, leading to better communication and cooperation, and higher levels of renewal and stability.
“It also sends out a strong message to potential investors that the properties are well managed, and generating the best possible return given the current market conditions.”
For lease and rent advisory support, contact the Garness Jones team today on 01482 564564 or email [email protected]
