How to negotiate a good deal for a commercial lease renewal.

Negotiating a commercial lease renewal for an auto-centre in the South-West of England

Background:

• The original lease was for 15 years from August 1995, subject to 5-yearly rent reviews and was holding over from August 2010.
• When the Landlord failed to negotiate renewal terms of the commercial lease, the tenant continued to pay the passing rent of £19,750 pa for 11 years.
• The Landlord offered our client a lease renewal for 10 years from August 2020 at £35,000 pa, subject to a rent review after 5 years.

In August 2020, Fairhurst Buckley were instructed to negotiate terms of the lease renewal:

• The new rental offer was rejected as not creditable having been unrealistically based on rental values in other towns.
• Fairhurst Buckley were able to demonstrate that the market rent for the subject premises was £24,500 pa and not £35,000 pa.
• The property market is driving demand for new leases to be agreed for shorter terms: for either 1) 10 years with a break after 5 years or 2) 5 years.
• Fairhurst Buckley negotiated a shorter, 5-year term for the new lease.
• The Landlord agreed to amend the user clause to reflect the Tenant’s changing business operation.
• Our client is now able to sub-let part of the property which had previously been prohibited.

Fairhurst Buckley has over 30 years’ experience working nationally in the roadside and automotive market and would be delighted to assist you to ensure you only pay fair market rents on lease terms which are suitable for your company.