Commercial leases: Shops, Offices Factories.

Shops, Offices Factories.

First of all, the good news. The “upwards only” clauses which were so prevalent until recently have gone. This provision meant the revised rent could only go higher on review, or perhaps remain as it was but it could never go lower even if market conditions at the time of review were very depressed. Nowadays, rents can be adjusted either upwards or downwards, on review.

Make sure if you or your agents are looking to take a lease of any commercial premises, that it is not an old lease being assigned to you. If so, this will probably contain the dreaded “upwards only” wording. If it does, look for a side letter confirming that these clauses will not be applied.

Always go for a new lease which will typically not include these provisions.

The bad news is that leases of shops, offices are getting more complex and may come as a package with draft lease, agreement, license for parking and perhaps a few side letters.  That is a lot of material for a solicitor, never mind his client, to familiarise himself with.

A solicitor will furnish to the client all these documents and highlight the most important provisions as they will regulate any occupier/tenant in his daily business.

Some important considerations for Leases of commercial property:

1.  Check your boundaries in the lease or the map attached.
2. Parking spaces for your customers in the lease or perhaps included in a separate license?
3. The particular use you have in mind for the shop is it clearly permitted? If you are opening a toy shop, could you ask the landlord for exclusivity? You do not want a

similar shop opening opposite you.

•   Ask your landlord to contribute towards the cost of your fit out of the shop unit. No harm in trying.
• Ask for six months’ rent free before your business is up and running.
• Try to negotiate rent based on your turnover and not the market rent but talk to your solicitor first. You can have a mixture of base rent and rent depending on turnover.
• You will have to pay rent and service charge. Check with the managing agents what this is or is likely to be.
• Show your landlord your plans or drawings for the shopfront and fit out. You are obliged under the lease to do this anyway.
• Usually, you will get keys to a unit or shop space that is Shell and Core i.e. empty. Your new alterations and fit out will likely need planning permission and your architect will ensure that the works done comply fully with the fire and building control regs.
• You will be liable for any internal repairs to your shop or office. Also, your shopfront including glass window. It is really important for an occupier or tenant to avoid becoming liable for the cost of any repairs to the external walls or structural parts of your shop. These repairs are costly and more properly should be a matter for the landlord who is often a developer or pension fund. Avoid taking on any serious or structural repairs.
• The lease is drawn up by the landlord’s solicitor and typically is weighed against a tenant occupier. You might have about 40 or 50 covenants in the lease to do or refrain from doing certain actions.
• It cannot be stressed enough that these types of office or shopping centre leases are quite complex. Talk to your solicitor about what is involved, and critically, do not sign up to any commercial lease until both you and your solicitor are satisfied and happy to proceed.

If a person requires legal assistance on a property sale/purchase matter from Property Solicitors, we can be contacted on  (052) 612 1999 or (01) 546 1121.