The lease advisory team at Vickery Holman often find themselves working on lease renewals where the tenant is a large organisation, with hundreds of stores or sites all over the UK. There are some factors to consider when working with these tenants to secure new lease terms, especially if our client is the landlord. With larger companies often comes an extra level of decision making, which can make it harder to secure lease terms that reflect the true value and performance of your asset.
A common example is the tenant having a blanket lease term applicable to all sites, say ‘a 5-year term with a tenant-only break at year 3’. Many national occupiers present this as non-negotiable, even where comparable evidence supports alternative structures. Left unchallenged, such terms could depress rental tone, undermine investment value and heighten re-letting risk.
National Lease Renewal Negotiations
Larger tenants, particularly those in the retail industry will often make use of section 26 notices at the earliest opportunity, starting lease negotiations 12 months in advance and with proposed new rents which are not based on market evidence. This means the landlord’s surveyor needs to do careful research and analysis into the property, the lease and the surrounding evidence in order to quickly assess the validity of the proposed rent and decide how best to tackle negotiations.
Local Knowledge
Local knowledge is key in any lease renewal and when working on renewals where the tenant is a national company, this is especially important. Vickery Holman have coverage from Oxford to Cornwall, South Wales to Hampshire, making sure we can offer prompt inspections, better market insight and accurate advice.
Third-party determination
Finally, national tenants often have more resources to pursue third-party determination than smaller tenants if terms cannot be agreed. Arbitration or independent expert routes carry cost, time and uncertainty. We will always look at the cost implications versus the likely outcome of any 3rd party action, so that our clients can make informed decisions on entering this contentious stage of renewal negotiations.
With several RICS chartered surveyors and registered valuers in our lease advisory team, we are able to provide an excellent service for landlord clients who find themselves in lease negotiations with all tenants, large or small.
