WHEN the national media were seeking an expert comment on a commercial property story, they turned to Milners solicitors.
Our Partner and Head of Property, Andrew Price, was able to share his insight on the controversial closure of a flagship store by Marks & Spencer on Teesside with readers of the Daily Express.
We were approached by Paul Jeeves, North of England correspondent for the Daily Express, to offer an expert overview on the fact that the High Street giant was locked into a 235-year lease on the building in Stockton, which now stands empty.
Drawing upon his commercial property expertise, Andrew was invited to give his own expert dimension to the story – and put into perspective how unusual it is to have such a long lease with reportedly such a large annual rent.
You can read his full overview that shared the headlines below:
“A lease of 235 years – about twice as long as Marks & Spencer has been in business – is not uncommon in itself. Some can extend to 999-years or more, but at a peppercorn amount.
So what raises the eyebrows is the level of rent – reportedly skywards of £140,000 – that the retailer has signed up to paying each and every year until well into the next century. That combination is highly unusual and out of kilter with the norm.
If true, then the only winner is the landlord who is sitting of a huge and regular income stream.
What’s more, it is being paid by arguably the most reputable names on the High Street and with seemingly little chance of their defaulting. It’s one of the safest commercial bets going.
So there is no incentive for them to do anything but count the money flowing into their bank account.
One would have to beg the question about the circumstances in which the company felt compelled to sign on the dotted line.
It’s doubtless a legacy of market forces and negotiations at the time, when it would have been decided that it was a price worth paying, and a lease worth signing, to secure that particular site.
The contents of a commercial store lease is watertight like any form of binding contract, with the landlord very much having the winning hand.
For a tenant who has decided to vacate a site, there are really only two options facing them in they don’t want to be liable for continuing to foot the rental bill while it stands empty.
One is to sub-let the premises to another tenant – the lease should allow them to do this – in a bid to claw back at least some of their costs, and reduce their financial exposure. It would also have the added benefit of breathing new life into the town centre.
The other would be to assign the lease in its entirety – but with a jittery High Street facing huge economic pressures, that is difficult at best.
Given the reported length of the lease and the scale of the rent, this is sadly a task at which Hercules would probably have to draw the line.”
Should you have any questions or concerns regarding commercial property, or any other property-related issues, please do not hesitate to contact this article’s author, our Partner and Head of Property, Andrew Price, here at Milners on 0113 245 0852 or email us at hello@milnerslaw