Commercial Tenants Benefiting From Incentives

Lease Lengths Hit Six-Year High, Report Finds


Commercial property landlords in the UK are offering "considerable" incentives to their tenants in a competitive lettings landscape, a new report sponsored by the British Property Federation states.
MCSI's IPD UK Lease Events Review revealed that rent-free periods have increased by 43 per cent compared with 2007's figures, going from 5.7 months to 10.1 months in seven years.
The report goes on to say that 49% of tenants are deciding to stay in their current locations rather than look elsewhere.
Meanwhile, new property lease lengths rose to 6.8 years in 2014, the highest level since 2008.
Although the occupier market is still some distance from its pre-recession strength, BPF director of policy Ian Fletcher said a "corner has been turned" as landlords and investors enjoy longer leases with fewer insolvencies.
"The results of the survey are very encouraging," he added. "Improved occupier confidence suggests that businesses are doing well, with even smaller businesses focusing on the future, which has positive implications for the wider economy."

Expert Opinion
The results of the BPF report are very interesting and reflect the findings of our own research into this area, with an Irwin Mitchell-commissioned survey confirming that 72 per cent of companies believe landlords are now offering sufficient flexibility to occupiers.

"As well as demonstrating increased tenant confidence, it suggests that landlords are becoming more flexible and accommodating than in the past as they strive to retain their existing tenants in their own buildings by offering a package of lease incentives rather than taking letting risk post lease expiry."
Rob Thompson, Partner