- Original Poster
- #1
Hi,
I’m looking for some advice / opinions on open rent reviews on industrial units in the current climate?
Our break / review date is imminent (literally in a couple of days) and a couple of weeks ago our landlord (a local foundation) informed us that our rent is due to almost double. This is after us chasing them many times since April to get an idea about any potential increase. They and their agents are extremely slow and cumbersome to deal with at the best of times but I believe that normally we would have been given more notice of this, but disruption due to the lockdown has caused further delays.
We’ve pushed back and have pointed to a number of units in the same town which are a similar size and are considerably less per SQFT. We’ve also pointed out that the prices those units are listed at are pre-negotiation prices and most importantly pre-corona virus.
The landlord has come back and said they have evidence of rent reviews and lease renewals on our estate at the same price per SQFT that they’re asking. And these renewals / reviews have taken place after / during the lockdown. They’ve stated they can’t offer us a better deal as it would be “unfair” to other tenants.
What they have said is that if we sign a new 10 year lease (we’re 5 years in to a 10 year lease) they will offer a very slight reduction for years 1 and 2 going up to their full asking price after that with open review at year 5.
Our opinion is that, removing corona virus and a possible huge recession from the equation for a second, what we’re currently paying (pre review) is a “good deal” and below (pre virus) market value. What they’re asking for now is high compared to similar units around us. Now when we take the virus / recession into account then who knows? We think we’re currently in a government funded bubble that is keeping prices static / artificially high and that bubble is about to burst. We also think that currently it’s not fair / possible to do a true assessment of rental value on the open market as the government funding is distorting the market.
Also, the evidence they’re using to justify the price (although very relevant as it’s on our estate) is an extremely small sample controlled by them. Just because they’ve convinced 2 other companies to renew at an inflated rate doesn’t necessarily mean that rate is the fair open market value when looking at a given area. As mentioned there are other examples locally not controlled by them where prices are lower.
And the fact that these are renewals and not new leases surely means they’re not indicative of open market value. Also, we have no information about what other incentives were included in the deals.
Does anyone have any opinion on this and how we should respond? Ultimately we don’t want to move out but feel signing up to a new lease at a significantly higher and overpriced cost may not be a wise move at the moment.
Thanks.
I’m looking for some advice / opinions on open rent reviews on industrial units in the current climate?
Our break / review date is imminent (literally in a couple of days) and a couple of weeks ago our landlord (a local foundation) informed us that our rent is due to almost double. This is after us chasing them many times since April to get an idea about any potential increase. They and their agents are extremely slow and cumbersome to deal with at the best of times but I believe that normally we would have been given more notice of this, but disruption due to the lockdown has caused further delays.
We’ve pushed back and have pointed to a number of units in the same town which are a similar size and are considerably less per SQFT. We’ve also pointed out that the prices those units are listed at are pre-negotiation prices and most importantly pre-corona virus.
The landlord has come back and said they have evidence of rent reviews and lease renewals on our estate at the same price per SQFT that they’re asking. And these renewals / reviews have taken place after / during the lockdown. They’ve stated they can’t offer us a better deal as it would be “unfair” to other tenants.
What they have said is that if we sign a new 10 year lease (we’re 5 years in to a 10 year lease) they will offer a very slight reduction for years 1 and 2 going up to their full asking price after that with open review at year 5.
Our opinion is that, removing corona virus and a possible huge recession from the equation for a second, what we’re currently paying (pre review) is a “good deal” and below (pre virus) market value. What they’re asking for now is high compared to similar units around us. Now when we take the virus / recession into account then who knows? We think we’re currently in a government funded bubble that is keeping prices static / artificially high and that bubble is about to burst. We also think that currently it’s not fair / possible to do a true assessment of rental value on the open market as the government funding is distorting the market.
Also, the evidence they’re using to justify the price (although very relevant as it’s on our estate) is an extremely small sample controlled by them. Just because they’ve convinced 2 other companies to renew at an inflated rate doesn’t necessarily mean that rate is the fair open market value when looking at a given area. As mentioned there are other examples locally not controlled by them where prices are lower.
And the fact that these are renewals and not new leases surely means they’re not indicative of open market value. Also, we have no information about what other incentives were included in the deals.
Does anyone have any opinion on this and how we should respond? Ultimately we don’t want to move out but feel signing up to a new lease at a significantly higher and overpriced cost may not be a wise move at the moment.
Thanks.
