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Act early and reap the rewards, says Jones Lang LaSalle which is advising on 40 lease restructures in South West
Bristol, 7th October 2011 - Commercial tenants and landlords should work together to consider the early re-structuring of their lease agreements for mutual benefit, say experts.
Tenants in particular could benefit from improved terms including financial incentives to enable them to invest back into their businesses, according to international property consultants Jones Lang LaSalle.
Right now Jones Lang LaSalle is advising on about 40 such early lease restructures in the South West and said they provide a “win-win” situation for both tenant and landlord.
“While it is true that landlords and tenants have differing needs, we are advising both parties to explore the opportunities presented by re-structuring the lease at an early stage,” said Allister Donovan, director in the lease advisory team of Jones Lang LaSalle’s Bristol office.
“What typically happens is that a tenant will leave it right up until the last few months of an agreement before speaking to the landlord about re-leasing, and we are urging that even if they still have two or three years left to run on a lease then they should aim to open talks with their landlord about re-structuring.
“Furthermore, many tenants are unaware of the opportunities to receive incentives in return for removing break clauses which may be due in the next few years.
“Likewise landlords should not be complacent and look instead at offers and incentives to encourage their tenants to take out even longer leases to counter the danger of being left with an empty property.”
Mr Donovan revealed he had just advised on a restructuring deal which saw household brand Hozelock sign a new 15-year lease even though it still had four years to run on its current arrangement.
“Both the landlord and tenant are extremely pleased with the outcome demonstrating a true win-win situation for both sides,” he said. “We currently have some 40 or so such re-structuring negotiations taking place and are advising many more on the benefits of looking at this as a way of reducing overheads and securing tenants for the long-term.”
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