28th June 2019 | Stephanie Kierans | Retail, Commercial Property
Temporary letting of space is becoming ever more popular in the retail market. Pop up retail shops in particular have a variety of benefits including the relatively low cost associated with securing and opening them. By their very nature, they... Read more
Temporary letting of space is becoming ever more popular in the retail market. Pop up retail shops in particular have a variety of benefits including the relatively low cost associated with securing and opening them. By their very nature, they are almost tailor made for the sale of seasonal products, such as those associated with halloween and Christmas. They can also be a great way for new retailers to test the water in the market place and for established companies to try out a new location. They generate awareness of the brand as they are usually located in areas with high footfall.
They also appeal to landlords keen to avoid having empty units in their schemes or on their high streets. In what is a tricky time for retail generally, many will consider offering short term leases to fill voids and encourage growth.
Depending on the bargaining powers of those involved, tenants looking at taking space on a temporary basis may want to think about the following when negotiating heads of terms:
- The term of such a letting is typically between 3 and 6 months. However, anything up to 12-24 months would still be a short-term letting. If a longer term is agreed, the tenant may also need to consider the option of determining the lease before the end of the fixed term.
- Rents based on turnover. If the unit is a success, the retailer pays more, but if not they pays less.
- Capping service charges or fixed rents inclusive of service charges
- Limiting the usual repairing obligations to hand back the premises in the same condition as they were in when taken – by reference to a photographic schedule of condition.
When it comes to documenting a temporary letting, the leases are usually short and simple with fewer obligations on the parties. If the rents are low and the term short, then stamp duty land tax and registration at the land registry are generally not relevant. Given the nature of the letting, property searches and extensive due diligence can usually be dispensed with. This means a less expensive conveyancing process as well as a low-cost set-up.
To find out more, please contact Stephanie Kierans.