According to one of the region’s most experienced commercial property professionals, Commercial property Landlords in Worcestershire and the West Midlands are missing out on opportunities to capitalise on the uplift in rental values. Commercial property rental values have increased substantially in Worcestershire and the wider West Midlands area over the last 5 years. This is particularly relevant in the warehouse and industrial sectors, with a huge upsurge in demand for storage because of the pandemic.
John Dillon, Managing Director at Commercial Property consultancy and Chartered Surveyors GJS Dillon, says that many Landlords often make the mistake of trying to negotiate rent reviews and lease renewals themselves. However, by trying to negotiate with their Tenants without proper knowledge of current market conditions, Landlords put undue pressure on that all important Landlord and Tenant relationship.
John says: ‘I have had several clients who have totally forgotten to execute the rent review clause in their lease, or they have approached their Tenant with an increase in line with inflation. Without the knowledge of what local Commercial rental values are, they get things wrong. Fortunately, most Commercial leases (not all) allow the rent review clause to be executed at any time. Commercial rents in the region, in most sectors, have significantly outstripped inflation due to the current short supply of space. So significant increases can be negotiated if the Tenant feels that they are paying no more than other Commercial Tenants in the area.’
‘We at GJS Dillon track all achieved industrial and office rents in the region and have done for the last 10 years’ continues John ‘So when we negotiate rent reviews or lease renewals, we use relevant local comparable evidence to show that the rent is no longer in line with current market conditions. It is not our intention to take advantage of Tenants, or to try to introduce unsustainable rental increases. Our aim is to negotiate fair agreements for both the Landlord and Tenant in line with the Royal Institute of Chartered Surveyors code of leasing practice.’
‘I think that Commercial rental values will start to flatten out towards the end of 2023 / early 2024’ predicts John ‘So we urge any Commercial landlord with an historic or imminent rent review or lease renewal to get in touch with us. Then we can discuss available options, and they can appoint an experienced Chartered Surveyor to conduct negotiations on an impartial basis.’
‘These negotiations will be based on concrete rental and market evidence to maintain a strong and healthy Landlord and Tenant relationship. This will be all important if we start to move towards tougher economic conditions in the Commercial Property Sector and wider UK economy.’
For further details of GJS Dillon’s rent review and lease renewal services, contact John Dillon Managing Director at GJS Dillon at 01905 676169 or via [email protected] or visit www.gjsdillon.co.uk
GJS Dillon has recently published its 5th Worcestershire Commercial Property Market report which provides invaluable insights and data on the industrial and office sectors in the County’s six sub-markets. For further details see www.gjsdillon.co.uk/marketreport
