What drives value here
- Net internal area measured consistently, and the loss factor on the floor plate
- Net effective rent after rent free, contributions and stepped increases
- EPC rating and MEES compliance, and who funds any improvement works
- Fitted, plug-and-play or Category A shell, and how the review clause treats it
- Service charge levels, caps and sinking fund contributions
- Break rights, term certainty and the value the landlord places on them
Headline versus net effective
Almost every office comparable needs unpicking. Twenty-four months rent free on a ten-year term with a break at five is a very different deal from the same headline with no break, and a landlord contribution to fit-out is rent in disguise. Analysing to net effective rent is the whole exercise.
Energy standards and who pays
Minimum energy efficiency standards have pushed improvement obligations into lease negotiations. Where a building needs work to remain lettable, that is fundamentally a landlord problem — but poorly drafted repairing and statutory compliance clauses can push the cost onto the occupier.
Right-sizing at renewal
Renewal is the natural point to reset floor area, term and flexibility around how the business actually uses space. The 1954 Act framework, used properly, gives an occupier real leverage on all three.
Common questions
What is a net effective rent?
The headline rent adjusted for everything the landlord gave away to achieve it — rent free beyond fitting out, capital contributions, stepped rents and breaks — spread over the term or to the first break. It is the only fair basis for comparing office deals.
Can I reduce my office rent at renewal?
Yes, where the market has moved. Unlike an upward-only review, a 1954 Act renewal sets the rent the market would pay now, so occupiers in secondary buildings frequently renew at a lower rent than they were paying.
Am I liable for works needed to meet energy standards?
Usually not as a matter of principle, but it turns on the wording of the repairing and statutory compliance covenants. It should be dealt with expressly at renewal rather than left to argue about later.
Guides for offices
- Commercial Rent Review SurveyorChartered surveyor acting for tenants at commercial rent review — evidence, negotiation, arbitration and expert determination across the UK and Ireland.
- Lease Renewal SurveyorTenant-side lease renewal surveyor: 1954 Act renewals, notices, terms and rent negotiated and, where needed, contested through the courts.
- Landlord and Tenant Act 1954 Lease RenewalPart II of the Landlord and Tenant Act 1954 explained for business tenants: security of tenure, Sections 25, 26 and 30, interim rent and compensation.
- Break Clauses in a Commercial LeaseHow break clauses in commercial leases work: notice periods, conditions, vacant possession, rent apportionment and the mistakes that make a break fail.
- Commercial Dilapidations Surveyor for TenantsTenant-side commercial dilapidations advice from an MRICS chartered surveyor: schedules, quantified demands, the Section 18 cap, the Protocol, Scott Schedules and settlement.
Talk it through