Short-lease rents in big demand

Sep 23 2009 by Peter McCusker, The Journal

BUSINESS space with short lease or rental commitments is much in demand as firms try to control costs during the recession, says Aidan Baker and James Moss of BNP Paribas Real Estate in Newcastle.

There is a surprising amount of interest in the market for office and industrial space, bearing in mind we are in recession and that it is the end of the summer, traditionally a quiet time of year.

Much of the interest is for the traditional route for acquiring space, that is through the leases of five to 10 years or more.

However increasingly there is demand for smaller amounts of space, either for short leases of perhaps no more than two years or for even shorter commitments for three months in serviced office accommodation.

Typically, Gosforth Serviced Offices and the Grainger Suite at Regent Centre, Gosforth, is attracting new occupiers and this serviced facility has plans to double its size due to demand.

The attraction of short rental agreements is flexibility and very accurate costs with no dilapidations costs. Location is another important aspect in particular for staff accessibility and facilities such as leisure and retail on hand.

Not only has the recession taught occupiers to be careful about occupational costs but it has also taught developers to be more flexible in their approach to marketing.

Commercial Estates Group (CEG), advised by BNP Paribas Real Estate and GVA Grimley, has introduced discounted rents at its Hawick Trading Estate, St Lawrence Road, just east of the main office and residential core on Newcastle's Quayside.

The current economic climate requires flexibility in respect of terms and rental costs.

Two remaining, one of 2,324 sq ft and the other of 4,356 sq ft are available at new rental levels of just £245 per week and £410 per week respectively.

CEG has already shown its ground-breaking approach to marketing by bringing to the market traditional office space to lease at its All Saints, Newcastle, scheme based on an all inclusive package that includes rent, service charge and for the first time dilapidations.