I’m prepared to admit it. Writing this blog can be tedious. Sometimes, I have spent ages dreaming up angles trying to make the London office market seem interesting. Well we need to be careful what we wish for because IT IS INTERESTING NOW! And good lord it ain’t pretty…
In this awful cloud cast by Coronavirus almost every company in the service industry (i.e. most office occupiers) is desperately trying to reduce cost. Income has dried up for an unspecified period of time, so business owners and financial directors are scanning spreadsheets to analyse outgoings. And unsurprisingly after staff, business premises are the predominant cost for many.
Unfortunately commercial property leases are legally binding documents which in essence have not anticipated this kind of event: a global pandemic necessitating social isolation and caused the closure of offices, non-vital shops, restaurants, cinemas, leisure facilities and parks!
During a lockdown, what can struggling companies do about their office space?
So what can struggling companies do on the property side? I think companies should swiftly consult with their solicitors, accountants / financial directors and critically their property advisors. After consulting with the experts it may then be appropriate to open a dialogue with landlords. And when speaking to landlords it is worth remembering that in this present mayhem they are human, they are suffering too (big time).
- Solicitors can advise on the legal liabilities under your lease and also important lease events (some obvious and others more hidden). These could include, a lease expiry, rent review, option to break etc. In due course they may be able to advise on any emergency legislation being introduced by the government to help in the short term.
- Look at your company’s financial position to see what shape it is in. There is widespread uncertainty out there and some companies are far more financially robust than others.
- Speak to us at Find a London Office (or your own property advisors if you prefer). Tell us what you have gleaned on “1” and “2” above and we can then discuss a potential approach to your landlord.
During the lockdown, talk quickly to your solicitor, accountant, FD and your property advisor. And then open a dialogue with your landlord about your lease.
Over the last few days not all the conversations we have had with landlords have been fruitful, but some have! And all have been diplomatic because everyone will remember the business conduct of others on the other side of this awful pandemic.