Following the recent pandemic and the current economic climate, the challenges facing retail businesses has increased significantly in recent years. This has led to retail operators wanting leases that will allow them to react quickly to change and limit risk (often sharing it with landlords more).

This blog looks at some of the key considerations for retail operators when reviewing and drafting new leases, or managing existing arrangements:

  1. Lease lengths may be shortened. This was prevalent before the pandemic, but that view has hardened, with commentators suggesting that most retailers now want shorter leases with the option to break after a few years. This is also most likely the result of rising energy costs and high inflation.
  2. Turnover Insight. Even if the rent for a lease is not turnover-based, landlords will want the tenant to provide more insight into reporting on trade. This is to allow the landlord to identify any potential issues as early as possible.
  3. Rent suspension. Tenants may be eager to incorporate rent suspension provisions in the event of future pandemics or other unforeseen events. Until insurers are able to provide suitable cover to landlords, this will remain an issue to be determined during negotiation between the parties.
  4. Turnover Rents. Given the volatility of the market, tenants are increasingly looking at a turnover rent model, which will put an element of risk on the landlords. This model benefits tenants as it ensures fair rent is being paid in relation to the revenue stream of the property. However, there is some resistance from landlords to move towards turnover rent models because of the impact on investment viability and valuation of assets.
  5. Market Rent Review. Many tenants would like to see upwards-only rents replaced with “market rentleases to reflect the potential effect of downturns in the market. Upwards-only rent reviews allow the landlord to increase the rent but prevents it from decreasing. Therefore, many landlords would not be in favour of this change because they want to have certainty in their investment, and this could be threatened if the rent has the potential to decrease.

If you want to speak to an expert on commercial leases then please call Nick Attwell on 01473 229 200 or email Nick at