We are listening

Like all good journalists, Dave Lawson latched onto a serious issue (Is anyone listening? Opinion, 23 June, TheFB). But by citing only the arguments propounded by certain occupiers attending the BCO conference in Berlin, he misses some important qualifying considerations.

His central thesis is probably true: customer pressure will lead to a market in which flexible leases, total service availability and green buildings are the predominant elements of occupational structure. But it is wrong to imply that this specification is going to be right in every aspect for all tenants — and it is simply not correct that most commercial property owners/managers are locked into a rigid attitude that prevents them satisfying tenants. Also, in unquestioningly espousing the cause of these particular occupiers, Lawson fails to recognise and deal with the real issue.

Although green buildings are regarded as important for the future of the planet and service availability desirable, for most occupiers the overriding need now is to ensure they have flexibility in occupational terms to enable them to respond to changing markets. Moreover, despite the government's public statements to the contrary, upward only rent reviews are not the essence of this issue — recent research reveals that the key concerns of tenants are to secure shorter leases and the ability to break the lease.

On this, the facts are instructive. Research by IPD on the nature of the terms being granted in new leases unweighted by rent reveals that in the period 1990-2000, in all three main property sectors and in all sizes of businesses, lease lengths shortened and the percentage of leases with break clauses grew. (New leases most accurately show the changes taking place in the market and unweighted data more accurately shows what is happening to the leases of small businesses.) The all property unweighted average length of new leases halved over the decade from 22 years to 11 years. For small businesses (under 1,000 sq ft) average new retail leases fell from 22 to nine years, for offices from 19 years to seven years and for industrial premises from 20 to seven years. The proportion of new leases with break clauses across the market as a whole rose from four per cent to 17.

The fact is that considerable flexibility already exists right across the property market for all kinds of occupiers seeking new leases. Moreover, the trend of the last 10 years has been maintained irrespective of whether the market was favourable to tenants or to landlords. There is no reason to suppose that it will not continue. Regulation of leases by government would prejudice this and result in reduced rather than extended choice. An improved code of practice, capable of being circulated to all tenants, would help to maintain the trend, especially if actively promoted by property professionals early on in negotiations between tenant and landlord. With this extra support, given a track record of delivering the required changes, it really is safer and better to leave it to the market.