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How to facilitate growth... by Nick Muncy of Januarys

wantspacegotspace.co.uk - How to facilitate growth... by Nick Muncy of JanuarysCambridge’s property market remains active despite the economic turmoil. Commercial property consultants Januarys look at ways of bridging the gap between start-ups with limited cashflow and landlords with high aspirations.

For tenants: Nick Muncey, associate

Tenants’ needs change for many reasons, some of which are completely out of their control. The switch to digital media consumption over the last decade has meant one of our long-standing clients who owns a publishing company now has the need for a smaller operation with automated processes. The landlord wanted to keep the space occupied, and was prepared to strike a deal that will keep both parties satisfied. We negotiated a 50 per cent rent reduction. The tenant agreed with the landlord to vacate the space within three months if they found a more suitable tenant, ensuring short-term security but allowing flexibility.
There are ways to negotiate lease terms to accommodate changes in your business. A combination of rental, lease terms – including break options – and running costs need to be considered. Many Cambridge tenants are linked with R&D and can have time-limited funding packages. Where possible, leases should try to accommodate these.

For landlords: William Rooke, director

Commercial property landlords in Cambridge can be encouraged by the number of start-ups in our area, however, they come with their own risks. Often, they are not able to guarantee lengthy occupancy in an office space.
These tenants are looking to step up to the next level of growth but don’t want to rent more space than they need, even if they are confident of future expansion. The key to getting the greatest return on investment is to offer a flexible deal. It is much more profitable to have the space inhabited, even if taking a lower rent. Other incentives can be offered such as rent free periods or a contribution towards fit out costs. Start-ups are not concerned about rent per sq ft – all they want to know is what their property outgoings are likely to be and if they can have the flexibility to expand or contract.
One of our clients recently acquired Stirling House in Waterbeach. He has offered space at a ‘value for money’ rent to get tenants through the door. Since August, Januarys has helped occupy 25 per cent of the 38,000 sq ft building – proof that being flexible can result in quicker take-up of space and a faster return on investment. Clearly, some landlords can, and should, hold out for the ‘big’ occupier. But in the current market wouldn’t a landlord prefer just to have their space let?

Posted by The Editor (wantspacegotspace) on 8th March 2013

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