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Three fundamental issues to consider when leasing commercial property

New business, growth and the inevitable expansion. The buzz of success and ambition to deliver more will often lead to a need to increase the footprint a company occupies.

Whether it is headcount or production output on the up, a first step from the home office, the latest branch or a new headquarters, astute organisations need to pause and consider three fundamental questions when making the move.

Here, Andrew Jackson’s specialist commercial property team looks at each vital aspect, to be considered well ahead of deliberations over car parking, office layout and decor.


How much will the premises cost me?

When agreeing to take a lease a business should consider the obvious financial factors such as the level of yearly rent, but there are other elements below the headline figure that will have shaped the search and settled a shortlist. These include:

  • costs of complying with obligations contained in the lease, particularly relating to upkeep and repairs
  • costs associated with renewing a lease which has only a short term to run (or of relocating if there is no renewal) contrasted with costs of committing to a lease with a longer term
  • costs relating to the timing of any rent increases falling during the lease, and how often they are factored in during the term


Can I operate from the premises?

Is the property fit for purpose, or can it be made to be? Ensuring this is the case is vital, and businesses should investigate matters, including whether:

  • alterations can be carried out by the tenant
  • permitted use in the lease can be changed
  • access and servicing arrangements are sufficient


Can I dispose of the premises?

Most business tenancies will be for a fixed duration and usually the lease will contain provisions which limit the ability of the tenant to deal with the premises.

A disposal may be necessary as part of a business sale, or, alternatively, the premises may no longer be suitable for the business. Demands and trends change, it could be cyclical, or the need may have related to a single project. In both instances the provisions contained in the lease relating to dealings will be relevant, and the reason for the move must be at the fore when entering the contract.

It may be possible to agree at the outset that the tenant can bring the lease to a premature end or set break clauses at intervals within the full term. With both solutions, penalties for invoking such rights should be minimised or avoided to enable the best business decision to suit the business’ best interests.

With so many pitfalls, a failure to consider properly all relevant issues at the outset could prove costly, so specialist advice should always be taken before committing to any lease.

Our Development & Strategic Projects team provides on-going, “end to end” assistance and support for clients through the lifespan of a project and, where that project involves land which is let or could be let short term.

If our specialist experience in these areas can assist you and your business, please talk to us today by calling 01482 325242 or e-mail head of the team, Richard Mays on:

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