Flexibility is key to commercial letting success
The high street retail sector has been a victim of reduced consumer spending and changes in shopping habits. This has inevitably led to further business failures, and the well-publicised demise of some of the large national multiples.
However, the availability of the premises left behind has allowed new specialist shops to fill the gap. Yes, discount stores have been among them, but we have also seen a variety of interesting new food/drink concepts and other niche businesses come to the fore. Some of these have already become sufficiently well established to be able to offer attractive terms in order to lease the best units. Others have only just started out in the High Street, looking to secure their first outlet. Those landlords who have been able to offer terms which protect their own interests whilst allowing these fledgling businesses time to establish, may well see this strategy result in a sound, secure, long term investment as their tenant flourishes.
Other business property sectors including offices, industrial and warehousing have also seen similar challenges and opportunities over the last 12 months. Premises have become vacant when leases have expired, but those landlords who have obtained advice and adapted their approach to take into account market requirements have benefited from reduced voids, securing tenants with the minimum of delay.
The two things craved by tenants in a challenging business environment are certainty and flexibility. Firstly, certainty in terms of such things as rent, service charges and repairing obligations. Secondly, flexibility in providing good quality accommodation which can adapt to changing occupational requirements, and opportunities to consider financial alternatives, such as phased or inclusive rent arrangements and appropriate provisions for sub-letting and lease breaks.
Where landlord’s investment objectives have been aligned with the market, the rest has tended to fall into place – with of course a little help from the letting agent!
Alistair Mitchell, Partner (Ipswich commercial team)