Odds shorten for a better shop deal  - shop leases continue to shorten

Shop leases are getting shorter at a greater rate than offices and industrial property. This is a key finding of the Annual Lease Review at the Brighton Conference held on 1 December by the Investment Property Databank (IPD) and the British Property Federation (BPF)

Ian Fletcher of the BPF said “Retail has been going through a tough time which means occupiers have been in a better position to negotiate”

Out of a sample of 75,000 leases they found that the average retail lease is 7.8 years which is a fall of 11% over the previous 12 months. Also 65% of the leases were for 5 years or less and fewer than 5% were more than 15 years.

Why shorter leases?

• The continued growth and convenience of buying through the internet
• Reduction of consumer spending as higher interest rates bite into debt
• Competition from larger stores with greater turnover and lower margins

The opportunities / the pitfalls

Those of you thinking of taking on retail premises or renegotiating leases have the opportunity to agree to a flexible lease which has regard to your business growth and not the other way round where the business is at the mercy of a contract of occupation.

Those investing in retail premises must look more in terms of the quality of tenants, they must understand the tenant’s businesses and the competition and threats as well as the opportunities that they face.

Both occupiers and investors can benefit from advice from valuation surveyors, lease length and of course rent are just two of the components of the contract for occupation. As with all contracts they require a commitment from both sides.

Log on for further tips and advice:

http://www.rdn.co.uk/lease.htm    
http://www.rdn.co.uk/rent.htm 

Please forward this newsletter to others who you think can benefit. We are always looking for referrals in this area of work.   -   Thank you

-----------------------------------------------------------------------------------------This is part of a regular series of topical articles provided exclusively by RDN Chartered Surveyors. If you would like further information or add your comments please reply to this e mail or contact Roger Nelson on 0800 902 0466