by Vengardesh Sivapatham LLB (Hons), LLM, Solicitor
5 November 2019
The Commercial Property Market Survey conducted for the third quarter of 2019 by the Royal Institute of Charted Surveyors points to a market downturn, except for the industrial sector.
The retail sector has suffered the most with no signs of easing. The reasons point to structural challenges across the retail sector and the Brexit impasse.
The majority of the participants to the survey are of the opinion that that the commercial property market is in the early or middle stage of a market downturn.
The survey notes that overall, occupier demand has fallen sharply since 2017 and continues to fall, with a similar trending being shown with co-variant indicators such as rent expectations, investment inquiries and capital value expectations. As expected, the opposite trend is shown with availability and inducements.
Looking to a breakdown of the relevant sectors, it is clear that the retails sector bears the brunt of these trends, with the office and services market and to a greater extent industrial and warehouse market showing more stability but still showing some evidence of a downward trend.
A significant cause of the current market situation is for purchasers and prospective tenants holding onto their money due to caution over Brexit and the surrounding political climate, with the current flow of transactions generally only taking placing where necessary or virtually necessary. Industrial rent remains relatively strong backed by the longer-term demand for the e-commerce model of goods distribution continuing to encroach on the traditional retail 'high street' model.
For tenants, this means that there is a greater opportunity for negotiating a lower rent, longer rent-free periods, and more generally favourable terms of any new lease or variation - if they have the appetite to enter into the transaction.
Landlords will have to be strict with enforcing their rent review covenants and other legal rights to make sure that they are not short-changed by tenants looking to improve their own cash flow at their landlord's cost.
SIMO & Co Solicitors is experienced in dealing with all manner of commercial properties, from both the Landlord's and Tenant's perspectives. We can help protect you from a turbulent market by negotiating better lease terms and protections in your lease and business agreements. If you need us to handle a transaction, dispute or simply need some legal advice, call us to book an appointment . We offer very reasonable fixed fee prices for expert service.
The opinions expressed in this article should not be construed as legal or financial advice, and should not be relied upon. If you require legal or financial advice, you should seek the assistance from a professional.
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