Rent Reviews in a Rising Market


In the years 2007 to 2015 commercial property rents saw a sharp decline. As much as 30% to 40% in some sectors, before rallying as the economy came out of recession and the slack in the market was taken up. Increases on lease rent review dates during these years were rare indeed. Almost unique!

Property investors and their agents are now enjoying a turnaround in the rising commercial property market with increasing rents adding to investor returns and agents earning fees from rent review work.

The experienced Chartered Surveyor with professional expertise in lease structures and rent review mechanics will apply market knowledge on behalf of an informed property owner to maximise the rent increase and return.

As a case study, an owner of a long leasehold industrial property at Stonebridge Industrial Estate, occupied by National Crash Repair Centres Ltd, instructed Drake Howard Property to instigate a rent review provision in the lease, to value the open market rental effective from September 2015.

The premises are in use as a vehicle body and mechanics workshop, for insurance repairs and extend to 14,000 sq. ft. Research established recent letting evidence across industrial estates in Coventry to support an increase and after a short period of negotiation with the agent acting for the National enterprise, a 6% uplift on the passing rent was agreed.

Martyn Howard considers this an excellent return for the property owner. “The percentage may not sound astounding, but if it is set against a back drop of acquisition of the property for the client 8 years ago at a 10% investment yield; with a small increase on rent achieved September 2010 (at the height of the recession!) and; retaining the ground rent at no increase on a 10 year review pattern, the value of commissioning an expert surveyor to handle rent review negotiations is overwhelming. Our fee for this instruction? Just 60% of one years’ rent increase.”