Put simply, “good” for a landlord manifests itself as:
- a fully occupied building,
- occupied by financially stable tenants,
- paying open market rents,
- in a stable market, and
- subject to watertight (landlord friendly) lease terms.
Lease terms that are deemed attractive to a landlord (and indeed its investors) will look something a bit like this:-
- A term of 5 years and over.
- A rent that reflects open market rent and provides an upward only rent review which is triggered frequently (for instance every 3 or 5 years of the term).
- A repair clause that amounts to a “full repairing obligation” on the tenant, or alternatively, a robust service charge mechanism that passes on all maintenance and service costs to the occupiers of the building.
- Avoiding break clauses where possible.
- Avoiding rent free periods or rent concessions (therefore ensuring full rent is payable during the term of the lease).
In addition, ensuring the commercial premises is in good condition, regularly serviced and maintained, with high specification interiors, up to date eco-friendly and efficient systems should result in quicker lettings and less empty spaces; It is more difficult to let a property on landlord favourable terms if the property is not in good condition.
