As a specialist commercial property solicitor with over a decade of experience both in the City and South London, I try to think about my client’s business needs as a whole. That means not only at the time I am instructed, but also by considering their future plans. In this article I look at what businesses need to think about when taking a new lease of commercial premises.
My business needs to rent flexible premises – what should I be looking for?
Successful businesses are dynamic and flexible, and with that often comes the need for more or less workspace over the years. A growing workforce means a need for more space. On the other hand more mechanisation or use of outsourcing could mean you need less.
Commercial leases are normally for relatively long periods of time (5/10 years is standard) so it’s important to think about the future at the start of a transaction.
Before you sign on the dotted line and pick up the keys to your new leasehold property, it is worth thinking about a scenario in which you might want to dispose of it, or what would happen if you want to take more space. Here are some key considerations:
These premises no longer suit me/are too big – how can I get out?
Consider having a tenant’s break clause in your lease. This will allow you to give the Landlord notice in writing to leave early. You must ensure that this lease provision is properly drafted to make it useable – see a commercial property solicitor! You should also put a clause in your lease which makes your Landlord pay you back the forward rent from the day you leave until the end of the next rent payment period, and this does not happen automatically.
Make sure the lease has a flexible permitted use for the property – this will allow you to sell (assign) the lease to a wider variety of commercial people if you decide to leave mid-way through the lease term.
Whilst you will need the Landlord to agree to a disposal (assignment) of the lease, make sure the terms of the lease make this as straightforward as possible and check there are no unusual conditions imposed by the Landlord.
Be mindful of the rent – ensure it is appropriate at the outset, and that any provisions for a rent review contained in the lease are not unduly onerous. It’s much harder to dispose of an over rented property.
Consider keeping the premises but underletting some of it – bringing in a new tenant to share the space. You will need the Landlord to agree to this and it is best to have to have it written into the lease at the outset.
My business is growing and I need more space – what can I do?
Good news - you now have a number of options:
Get rid of your current premises (see above) and rent somewhere new that is better suited to your needs.
Keep where you are but rent additional premises – maybe in a new area to maximise your exposure to customers?
Arrange with your current Landlord to move into alternative premises that they already own – do a swap.
Take more space within your current building/estate.
These matters will need to be negotiated, but you can, for instance, have a right of first refusal to take a lease, or an option to purchase your Landlord’s neighbouring property if it becomes vacant.
We appreciate that there is a lot to think about. However, we specialise in commercial property law. Our team of experienced commercial property solicitors can help you to get the deal that is right for you. We are actively involved in the fast moving market in Crystal Palace, Bromley. Croydon, Beckenham, Orpington and the surrounding areas as well as within central London.
If you need some further advice about your commercial premises and hos to get the most out of it, don't hesitate to contact our Commercial property team on 020 87686869