Negotiating premium on commercial lease

[EGPLtd]

Hi,

New to this forum and was hoping if anyone can shed some light on a potential lease deal.


Speaking directly to the commercial agents, the landlord is requesting a premium of £35k but upon viewing the premises, I do not see what I am getting as the retail unit will be supplied in a shell and I won’t be taking over an existing business. I understand that the landlord would want £35k just to sign a lease but this property has been on the market for over a year now so it can’t be generating too much interest.


My question is, do I outright refuse to pay a premium when sending my initial offer or should I try negotiate on how much I should pay? I do not want to come across ignorant.


Thanks for reading

 

[deniser]

There is absolutely no reason to pay a premium if you are getting nothing in return.

It would in fact be very peculiar to pay one for an empty property unless the rent is less than market rent.

Are you sure it's not a reverse premium ie. they give you £35K towards fitting out?

 

[EGPLtd]

The rent is very normal for the area so I really am confused to why the landlord is asking for such a premium.

The agents said the landlord wants £35k regardless of use.

 

[kulture]

Walk away. If they are serious they will come back. If you cannot walk away then you are admitting that the unit and its location has a value to you.

 

[ComPropSolicitor]

would recommend that you instruct a commercial property solicitor to help you negotiate terms. I can offer some further assistance or advice if you require.

 

[WaveJumper]

What is the actual annual rent they are asking for and length of lease

 

[ecommerce84]

Is the 35k not the rent for the year?

I find it odd that they would ask for a premium that high unless the unit is in a super prime location and prospective tenants are basically bashing the door in to rent it.

Also, I would consider instructing a commercial solicitor sooner rather than later as there is a lot more tricky jargon to come and plenty of banana skins to slip on.

 

[deniser]

Not only should you not be paying a premium but you should be asking for a rent free period during which to do your fitting out works (to include the value of those works)

 

[EGPLtd]

What is the actual annual rent they are asking for and length of lease

The asking rent is £40k but I think this is very normal for the area. Length of lease and other requirements are to be negotiated.


I will of course ask for a rent free period but I am worried my offer may sound very unreasonable as not only am I refusing to pay the asking premium, I am also asking for a rent free period.

 

[WaveJumper]

Yes you need proper legal advice.

There are occasions when a premium maybe be paid, say if the passing rent was actually 100k a year and you were getting the unit at a very substantially reduced rate, a mind field of an area you really do need to seek proper legal advice from a commercial solicitor.

Yes you should ask for a rent free period, many of your high street competitors would ask for this and a contribution to their fit out costs. One very well known high street retailer would always ask for about 1m so don’t feel bad.

It also pays sometimes to have your own agent working for you.

 

[WaveJumper]

Have a look here

https://www.ukbusinessforums.co.uk/...um-for-on-a-commercial-property-lease.345734/