How has COVID-19 impacted the need for Commercial Space?

Shop to let sign outside of a cafe

During the pandemic, people have discovered that they can be more productive at home and enjoy the freedom of a more relaxed schedule and very few openly mourn their morning commute therefore Covid 19 effect has accelerated the trend for home working.

However, there are limitations to this where many businesses will still depend on face-to-face interaction. Businesses are in the midst of considering whether to keep their commercial spaces as per pre-pandemic or face the following question: Do we need to downsize our commercial space and if so, how?

There are a few options available if you want to downsize your space and we will consider each of the following:

  1. Exercise any break rights – if your lease contains an option to break your lease then you need to ensure that you follow all requirements contained in the lease to be able to validly exercise your break option. The most important points to note (which apply to most leases) are:

(a) Check whether any type of consideration is payable to the Landlord upon exercising the break right. For example, will you need to pay the Landlord £10,000.00 for the liberty of exercising your break right.

(b)  Serving the break notice must be in accordance with the notice period contained in your lease – usually this is 6 months before the break date.

(c)  If you are in rent arrears, you will most likely be required to pay these before the break notice can be effective.

  1. Sell your lease – if your lease contains provisions allowing you to either assign or sublet then it could be worth trying to find a new tenant to take over your lease.
  2. Speak to your Landlord – many tenants are currently dealing with this issue of downsizing and you may find that your landlord would be open to either surrendering your lease, agreeing to downsize your demise or simply negotiating a break right into your lease for later in the time.

In these unprecedented times, it is imperative that landlords and tenants communicate with each other to try and resolve any issues particularly if you are considering a downsize, it will be important to speak to your landlord sooner rather than later. The traction surrounding COVID-19-related rent concessions suggests that tenants and landlords who are consulting with each other are achieving mutually acceptable results at an early stage.

At Askews Legal LLP, we have a dedicated team of specialists in the Commercial Property department to deal with commercial property issues. For further advice or to obtain a quote, please contact Mr. Kuljeet Sandhu, Head of Commercial Property at Askews Legal LLP.