Rent / lease terms - Get out clause?

[Jamie Webs]

Hi,

I'm looking at commercial properties to rent and most are asking for 5 year leases.

I'm looking at both retail shops and industrial units, as we are an online business passing trade doesn't come into it.

My worry is 5 years is quite long. What if we need somewhere bigger after a couple of years? We can't move for another 3 years?

Is it normal to have some sort of get out clause in a contract where something is payable to get out, but not the full lease amount?

Cheers

 

[Paul Kelly ICHYB]

we are an online business passing trade doesn't come into it.

So why are you looking at shops? By their very nature, they are a premium to industrial space.

If you find somewhere, make sure you include a break clause in the lease.

 

[DontAsk]

Is it normal to have some sort of get out clause in a contract where something is payable to get out, but not the full lease amount?

"Break clause" is the term you need to know and negotiate on.

 

[Jamie Webs]

So why are you looking at shops? By their very nature, they are a premium to industrial space.

If you find somewhere, make sure you include a break clause in the lease.

Because where I live there are very limited options for spaces. Also, ideally, I don't want to be freezing my ass off in winter in an industrial unit... but beggars can't be choosers.

Is there a typical break clause that is included? I'm not sure what I should even ask break wise. e.g. would 6 months notice suffice?

 

[Paul Kelly ICHYB]

It is not based on notice, but an agreed time. A break clause in 2 years of a 5-10 year lease is not uncommon (but you will need to give x months notice on invoking the clause).

Also, remember that the clause would probably be mutual, so they could get rid of you!

 

[Jamie Webs]

It is not based on notice, but an agreed time. A break clause in 2 years of a 5-10 year lease is not uncommon (but you will need to give x months notice on invoking the clause).

Also, remember that the clause would probably be mutual, so they could get rid of you!

Thanks, yes I understand they could also get rid of us.

The fit out isn't expensive so I'm not overly concerned on that as it will be mostly just racking/work benches.

I'll see what they come back with!

 

[Mark T Jones]

As others have said, it's a break clause, and like anything in a lease it may be negotiable.

Or not, depending on the landlord.

As a broader point, given that you are a novice to leases, please be sure to get proper legal advice before signing anything!

 

[WaveJumper]

Depending on what sort of business you are running you could get a "pop up" retail unit many landlords will be happy to have one of their empty units filled on monthly rolling terms, could mean you are out at a moments notice but might suit your needs in the short term.

They quite often look to just have business rates & service charge costs covered, saves them putting their hands in their pockets.

 

[Paramount Embroidery]

If you go retail then be wary of more chance of crime, business rates valuation, maintenance on older properties, dilapidations. It's a minefield.

 

[Chris Ashdown]

Go to your local planning office or town hall, they often have very low cost units that are in crap area's of town which are never advertised but operate sometimes on just one year licences. That's how I started out, also lots of empty offices above shops at peppercorn rent especially in town centres

 

[Mark T Jones]

Go to your local planning office or town hall, they often have very low cost units that are in crap area's of town which are never advertised but operate sometimes on just one year licences. That's how I started out, also lots of empty offices above shops at peppercorn rent especially in town centres

Do this

Or even take a look at self-store units