Posts Tagged ‘Commercial Rental Property’

Retail Property to Rent

It doesn’t take a property genius to work out the high street is currently in decline but the out of town retail sheds are also taking a battering in the current tough economic climate with big retailers like Halfords and Carpetright giving severe profit warnings, so what is the outlook for potential retailers before committing to a retail property to rent?

Who will fill these A1 (the use class for high street retail)spaces?   There seems to be little shortage of A3 (restaurant and pubs) and A4 (hot food takeaway) with outlets like Subway often opening 4 -5 outlets in one medium sized city alone.   Starbucks has had to reinvent itself from the top downwards in order to stay ahead of the countless designer coffee outlets and Costa Coffee is snapping on its heels.  Have coffee houses reached saturation or is there still potential for high street low cost retail property to rent? Read the rest of this entry »

Commercial Rental Property

Commercial Rental PropertyIn large cities if a business needs to take space it will invariably be a lease which is available which brings me onto commercial rental property.  It is rare for freeholds to be available at affordable prices.   It is the preserve of investors, wealthy landowners and financial institutions looking for secure rental income.   Most businesses will be looking at commercial rental property.   So what are the disadvantages of rental property as opposed to freehold properties?

Commercial Rental properties are granted for varying terms.  25 year leases used to be the norm.  This was the length of a so-called “institutional lease” ie. A lease which would be suitable as an investment vehicle for a financial institution.  However, the length has been steadily decreasing and the recent credit crunch has given potential tenants the bargaining strength and brought rental terms crashing down.

Most tenants are now looking for no more than a 5 to 10 year commitment and sometimes they want shorter break options within that term.   In strict terms a lease should only be regarded as the length to the earliest break option.  So if a 10 year lease contains a tenant’s break option at year 3, then this should be regarded as a 3 year lease.  The tenant may not exercise his break but you cannot rely on more than 3 years rental income as a landlord.   There is a glut of office premises in most cities especially the secondary properties ie. Not new built offices but existing offices.   Landlords are open to negotiation.

So what terms should a tenant be seeking in the current climate? Read the rest of this entry »

Dominic Beeton, Solicitor
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