Bewley’s Cafe case shows high stakes of a ‘court lease’ if sides can’t agree terms
Neil Bannon, chairman at Bannon, confirmed that new leases are now typically for seven years. This usually involves the tenant repudiating their rights to renew the lease on expiry, which also improves flexibility for the landlord. This flexibility is of increasing importance for landlords too. Mr Bannon sees this flexibility as a positive move and said that “we are moving closer to the European model”. This flexibility is of increasing importance for landlords too. “Consumers demand excitement and change, so landlords need the ability to actively manage their portfolios.”
This increasing flexibility has improved Grafton Stree with a greater variety of smaller European retailers, rather than a copy of a typical UK High Street.
This era of shorter leases increases the likelihood of rents rising, Mr Bannon said. “There is less emphasis in the market on the rent review cycle, and more on new lettings and change.”
He also pointed out that rents quoted in the market now are “net effective rents”, which take account of any rent-free period granted. There has been an ”artificial softening” in rents, since pre-Covid, when “headline rents” ignored tenant incentives. The rents quoted now are “more honest”, he concluded.
