Lockhart & Lockhart: Chartered Surveyor Experts in Commercial Property

It may come as big shock to tenants of industrial and warehouse premises, but rents have been rising significantly in the last two years. Most leases of five or more years duration incorporate a rent review mechanism. Currently if you signed a lease say 5 years ago and you have a forthcoming rent review you can easily be facing a 35 to 40% increase in rent.

However, the good news is you don’t just accept whatever the Landlord throws at you. I recommend you take professional advice from a Chartered Surveyor expert in Commercial Property. He or she can give you guidance on rents typical for your style and size of unit and give you sound recommendations. Almost without exception the lease will also incorporate a process that if the Landlord and Tenant cannot agree the revised rent then the matter can be referred to an Independent Expert or Arbitrator.

I cannot stress enough the importance of a tenant reading their lease thoroughly and regularly. Do not simply rely on your solicitor to advise you to sign, file and forget it. It is a living document, and you are signing up to obligations which you should be familiar with. Commercial leases do not operate in the same cosy world of residential leases where there is in a raft of legislation to protect residential tenants.

Landlords sometimes do not operate the rent review on the date in the lease and may wait a few months. The lease in most cases will allow them to back date the rent increase and indeed charge interest. Knowing when your review is due will avoid an unexpected increase and enable you to budget in advance rather than playing catch up.

Why the increase you might say? Rising rents have been stoked by steady demand meeting a shortage of available quality space combined with a scarcity of employment land on which to develop new speculative buildings. You will know this yourself as there are many fewer to let boards on Industrial and warehouse estates than was the case 10 years ago. The current obsession with catering for the pressing need to build ever more numbers of houses means former industrial sites and buildings have been demolished to make way for housing and green field opportunities have largely gone to housing as opposed to being allocated to employment.