June 3, 2002—The UK office industry has the least flexible leasing systems of the major world markets and should take note of its fellow European countries.
These are the findings of a survey by the British Council for Offices (BCO), which urges the UK to adopt a more flexible system to meet the demands of occupiers. The typical 15-year lease in Britain means occupiers have to commit to at least 50% longer than all other international markets says the report.
Moreover, break clauses are not automatically part of the lease as they are in other countries, and standard UK leases contain upwards only rent review clauses. These usually kick in every five years resulting in cost uncertainty for occupiers.
According to the BCO survey France has the most flexible leases with occupiers being able to break every three years, while having security for an optional 18 years. Italy comes second with an initial lease of six years that can be renewed for a further six.
In Spain and Sweden lease terms are five years with the option to renew. Indexation is standard and market-based rent reviews can be up or down. Most other countries have five or ten-year leases. In addition, turnover rates in the European markets are lower than the City of London suggesting that leases in the UK could be shorter without impacting the length of occupation.
—Jessica Jarlvi
Reprinted with permission; copyright 2002 i-FM
