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Dealers should push for better terms from landlords

Dealers that have leased properties are in a good position to drive better terms from their landlords due to current market conditions.

Rapleys, the property consultants, said that despite the fall off in property values, poor market conditions can often provide unexpected opportunities for tenants to negotiate.

Peter Nicholas, an associate director at Rapleys Manchester office, said: “Those dealers who occupy showrooms, or indeed any type of support property, including off site workshops or compounds, have never had a better opportunity to negotiate more competitive terms, particularly where leases are close to expiry, or in situations where there might be an imminent break option in the tenant’s favour.

“The threat of a property falling vacant in this market can seriously affect the landlord’s position."

Not only is there the loss of the rental income, but landlords will be burdened with the holding costs of insurance, security and empty rates liability once the premises has been vacant for more than three months.

Nicholas said: “Marketing exercises can be costly and very protracted. Awkward properties can quite easily take upwards of 12 months to re-let and even then landlords can expect incoming tenants to drive very hard terms going forward. Vandalism can also occur.

“In the current environment, landlords are keen to avoid properties falling vacant, in some cases, almost at any cost.

"In our view, market conditions are such that tenants have never been in a better position to extract concessions from their landlords and should seek to do so wherever the opportunity arises.

"By way of example, we have recently utilised a threat of a break option, both to negotiate a reduction in a client’s rent in the order of 15%, but also with the landlord agreeing to the tenant being afforded a further break option in 2013 when one did not previously exist."

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