Brick-and-mortar retailers have faced unprecedented headwinds in recent years. Rising costs, increasing competition from online stores and falling demand are all squeezing margins. With external factors making life increasingly difficult in the retail sector, it becomes all the more important to focus on the factors you can influence, and one of those is your commercial lease.
That’s where retail lease advisory comes in. Commercial lease advisers provide strategic advice throughout the lease cycle to help tenants and landlords make informed decisions, minimise risk and get the best possible deal.
What is retail lease advisory?
Retail lease advisory is a professional service that helps landlords and tenants navigate the complexities of commercial leases. Commercial lease advisers offer practical support and expert advice on everything from lease renewals and extensions to rent reviews, dilapidations, and disputes.
In the commercial lease landscape, mistakes can be costly. That’s particularly the case for small retail businesses without in-house legal or property management teams. Retail lease advisory services ensure lease agreements are fair, optimised for their clients and aligned with their long-term goals.
What does commercial lease advisory include?
Lease advisory services cover every aspect of a commercial lease, from the initial negotiation through to lease exits and surrenders.
- Lease negotiation - Helping tenants and landlords negotiate new leases on favourable terms.
- Rent reviews - Advising on strategies for landlords and tenants to get the best outcome from rent reviews and helping tenants challenge unreasonable increases.
- Lease renewals - Advising on the renewal process and ensuring a lease has favourable terms.
- Lease structuring - Assisting in structuring leases to protect a client’s interests.
- Break clauses - Helping landlords and tenants understand the implications and opportunities provided by break clauses in leases.
- Lease exits - Acting for tenants and landlords to ensure they exercise break options in line with the precise terms of the lease.
- Lease surrender - Negotiating mutual agreements between tenants and landlords to surrender a lease before its expiry date.
- Lease assignment and subletting - Advising on subletting and how tenants can install a suitable subtenant who will adhere to the existing lease provisions.
- Dilapidations - Advising tenants on their responsibility to make repairs while mitigating unnecessary costs, and helping landlords ensure tenants meet their repair obligations.
- Dispute resolution - Mediating landlord-tenant conflicts to find mutually beneficial solutions.
Why is lease advisory crucial for retailers?
Well over half of the UK’s retail spaces are currently rented rather than owned by their occupiers. Whether it’s local shops, cafes and hairdressers, or out-of-town supermarkets and department stores, lease advisors play a crucial role in structuring, negotiating and finalising leases that are compliant and meet the strategic needs of landlords and their tenants.
Tenant lease advisory
Retail lease advisory helps tenants agree lease terms that are competitive, align with their strategy and offer flexibility. Central to that is negotiating a favourable rent and service charge to minimise occupancy costs, and navigating rent reviews while avoiding and challenging unfavourable outcomes.
Risk mitigation is also an important consideration. Lease advisors identify and advise on the potential risks associated with a lease, often around dilapidations and rent increases, to help tenants avoid unpleasant and costly surprises.
Landlord lease advisory
With quality tenants becoming increasingly difficult to find, retail lease advisory also plays an essential role for landlords. Lease advisors can assist with retail lease negotiations and renewals to ensure landlords maximise the income from their properties. That can include identifying opportunities for improvement, such as alternative use options and lease restructuring.
Lease advisors also provide strategic guidance to help landlords build and maintain positive relationships with their tenants, leading to longer tenancies and reduced void periods. They also ensure leases are up to date and compliant with changing laws and regulations to minimise the risk of financial penalties or disputes.
What is the retail lease advisory process?
Whether you’re a landlord or tenant, this quick overview gives you an idea of what you can expect from the commercial lease advisory process.
Initial consultation and assessment
The process will begin with an initial consultation to understand your objectives and the issues you are currently facing with your lease.
Lease analysis
The adviser will conduct an analysis of the lease and its terms to identify the potential risks, opportunities and areas for improvement. That will include key clauses, break options and rent review provisions.
Market analysis
The adviser will analyse the market to understand rental values of comparable properties and market trends for use in negotiations.
Negotiation
Whether it’s changes to a lease agreement, negotiating a rent reduction or agreeing on an extension, your advisor will enter into negotiations to secure a favourable deal.
Ongoing support
Lease advisers can monitor market changes and provide ongoing support to ensure you have an optimal arrangement over the long term.
Expert advice at every stage of the lease cycle
Eddisons provides retail lease advisory services to landlords and tenants throughout the lease cycle. From retail property rent reviews to lease renewals and dilapidations, our RICS-registered surveyors and lease advisory experts are ready to assist.
Find out more about our retail property services, including lease advisory, and get in touch to discuss your requirements with our team.
