Recently in RICS Category
I was interested to read last week about RICS launching a new small business lease, in order to ease the process by which new and independent retailers can acquire vacant high street space.
The move comes as high street vacancy rates sit at 11% nationwide; with some forecasts claiming that marginalised areas could hit 50% by 2015, when around half of high street leases across the country are due to expire. So, with that rather bleak prediction looming in the background, RICS have reached out to the independent trader, and offered a simpler way of navigating the 'costly and complicated' process of obtaining their first commercial lease.
This partially mirrors an initiative taken some years ago by the British Property Federation; who published a 'short commercial lease' template; albeit without a discernible leaning towards either 'new' or 'independent' retailers; and - curiously - with no specified limit on lease length (aside from the word 'short').
Embedded within the wording of RICS' small business lease, however, are a couple of indications of current trends - for example, the lease cannot be used for an agreed term of over five years; the national average lease length currently sits at around 5.3 years. The lease also includes a break clause - something which was included in almost one third of leases agreed last year.
It also follows that RICS would specifically target small businesses and 'new and independent' retailers, after figures from 2011 indicated that such outlets clearly outperformed national multiples in terms of high street openings. They are, evidently, the best bet to try and stave off that portended 50% vacancy figure, as bigger retail brands continue to seek fewer, larger stores in refurbished megamalls or out-of-town parks; rather than forge ahead with high street expansion.
Hopefully, an easier-to-navigate path to high street occupation will result in a healthier vacancy rate figure in future years - and will put and end to landlords' temptation to charge absurd nominal rents to national chains in order to avoid vacancy rates.
The lease template is available to download here.