Posts Tagged ‘Credit Crunch’

Commercial Property London: Key Areas For Business

Commercial Property LondonLondon, the capital city of the United Kingdom, has always had a strong strategic advantage over other cities.  With its position in the time zones, it is able to do business with both East Coast and West Coast of America, Europe, the Middle East and the Far East.  This has made London a key financial market in the world and an ideal place for Commercial Property London.   It was feared that the credit crunch and banking collapse would mean London lost its significant but with the return of huge bonuses and the announcement of record profits, it appears that London’s position as a key financial centre has been reinstated.

London also remains a key place for global businesses to have an office or outlet.   So there is considerable global competition for new office space in both the City and the West End.

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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