Premises lease - negotiation - New Build

[MarkG1303]

Does this seem a little heavy for an early discussion on the premises, or would you go in harder? Also, the 5-year suggestion from the landlord is 2 months free and a 'Landlord only break clause at 2 years'? (clearly, I will take full legal advice before signing anything, but I just wanted to sound people out?) The lease price isn't over the top in the local market, though year three is fairly high.

What I am planning to countering with

• 5 Year Lease Term (as per your terms)

Yr 1 - £16'800 +vat
Yr 2 - £22'400 +vat
Yr 3 - £28'000 +vat

• 3 Months Rent Free Period
• As part of the setup, the landlord agrees to the provision of a floor covering (Spec discussed for negotiation, mutually agreed)

Thoughts welcome

 

[WaveJumper]

Lol great if they can get away with that you're looking at a 70% increase in rent over a three year period ?

Yes go for 5 year lease, I certainly would not be agreeing to those rents, 6months rent free for fitting out, and a break clause for you with three months notice at any point

Glad your speaking to a solicitor .......hopefully one who understands commercial leases.

 

[AlanJ1]

and a break clause for you with three months notice at any point

Unless they are desperate and I mean desperate to rent this out, absolutley no commerical landlord is giving these terms, would actually find it cheeky if someone asked me for this.

 

[MarkG1303]

Unless they are desperate and I mean desperate to rent this out, absolutley no commerical landlord is giving these terms, would actually find it cheeky if someone asked me for this.

Can you expand on what you mean?

 

[MarkG1303]

Lol great if they can get away with that you're looking at a 70% increase in rent over a three year period ?

Yes go for 5 year lease, I certainly would not be agreeing to those rents, 6months rent free for fitting out, and a break clause for you with three months notice at any point

Glad your speaking to a solicitor .......hopefully one who understands commercial leases.

Would you have any thoughts on countering the offer when you say 'not agreeing to rents'?

 

[AlanJ1]

Can you expand on what you mean?

Wave suggested you ask for a 3 month break at any time and I was disagreeing saying no sane landlord would ever give this clause.

 

[AlanJ1]

Would you have any thoughts on countering the offer when you say 'not agreeing to rents'?

The main thing is countering with what you are happy to accept, you can in theory counter with anything, doesn't mean they will accept.

 

[MarkG1303]

Unless they are desperate and I mean desperate to rent this out, absolutley no commerical landlord is giving these terms, would actually find it cheeky if someone asked me for this.

Ah got you, I was thinking of asking for that clause to be a joint option, in other words, a landlord and tenant break clause at 2 years in the 5-year contract?

 

[Mark T Jones]

Break clause should definitely be both ways

Other things really do depend on factors like the are, the nature/desirability of the property and your credentials as a tenant.

I'd nail down the rent escalation- probably year 3 is 'market rent' and years 1 & 2 discounted - but you need to be sure

6 months rent free is fairly common - but probably either/or with flooring

There are other variables which a lawyer should point ot

 

[MarkG1303]

Break clause should definitely be both ways

Other things really do depend on factors like the are, the nature/desirability of the property and your credentials as a tenant.

I'd nail down the rent escalation- probably year 3 is 'market rent' and years 1 & 2 discounted - but you need to be sure

6 months rent free is fairly common - but probably either/or with flooring

There are other variables which a lawyer should point ot

Thanks Mark, yes the location is prime, it is new build and I think in terms of the surrounding 20 miles is about right even at the top end price. The landlord did describe it as discounted and stepped, it is written as yr 1 - 60% of the total, incentive, Yr 2 - 80% of the total, incentive and year 3 standard market value.

I was told that 6 months was the right amount to ask for and even if they came back, 3 months should be a minimum expectation.

I think if I can get the flooring (170 m2) and a decent rent free period I would feel comfortable (obviously with the legal advice to boot)

 

[WaveJumper]

Again as mentioned above this whole process is one of negotiation, whats the going rate per square foot for comprisable property, what value was the latest deal done for in the area.

Have you checked other costs like business rates etc

Oh and there's no such thing as cheeky Ive dealt with retailers wanting 1m towards fit out costs ..... although you might call that cheeky.

PS

I just got distracted by the markets - Break clause should definitely be both ways