Commercial leases in the UK regions: business as usual?

Abstract

Purpose

The purpose of this paper is to analyse the changing nature of commercial leases with specific reference to the landlord and tenant relationship, lease lengths and incentivisation in the post-recessionary UK property market.

Design/methodology/approach

The research applies data analysis utilising the Estates Gazette Interactive database coupled with survey analysis conducted across three UK cities to investigate and compare the changing nature of the commercial property leasing market and the landlord and tenant relationship.

Findings

The empirical analysis highlights that recessionary conditions prevalent in the market from the 2007 global crisis has caused a reassessment of lease structures, leading to shorter lease terms and increased use of incentives, as tenants have been empowered to negotiate more flexible leases due to their stronger market position.

Originality/value

This paper builds upon previous research conducted back in 2005, investigating commercial leases in the market up-cycle. The recent volatility in the commercial property sector requires fresh insights and in-depth analysis of lease patterns, length and covenant strength, which is fundamental for investor decision-making. In addition, past research has tended to consider solely landlord or occupier perspectives, whereas this research offers new insight into the landlord–tenant lease negotiation process.

Citation

McCluskey, D., Lim, L.C., McCord, M. and Davis, P.T. (2016), "Commercial leases in the UK regions: business as usual?", Journal of Corporate Real Estate, Vol. 18 No. 4, pp. 227-253. https://doi.org/10.1108/JCRE-12-2015-0048