2 March 2020
Lease regears at Leatherhead House create successful outcome for all
Professional services, Rent reviews & Lease renewals
Acting on behalf of occupiers JLT and Zest, SHW advised on the feasibility of relocating or remaining in their existing space at Leatherhead House in Surrey.
Several alternative sites in Leatherhead were considered at the same time as negotiations over the tenants' existing leases of 14,000 sq ft (JLT) and 6,000 sq ft (Zest). Both companies agreed to stay at Leatherhead House with JLT achieving a substantial space reduction on flexible terms and Zest obtaining improved security of tenure and a direct lease with the landlord.
The challenges
Zest were a sub-tenant of JLT and SHW needed to:
- Agree new terms for both parties.
- Simultaneously surrender and regrant the new leases.
- Improve security of tenure for Zest, an unprotected tenant.
- Work closely with the landlord within a tight timeframe.
What were the main drivers for staying?
- For JLT, flexibility had become more important as they were being acquired by Mercer. With uncertainty around the new business structure, the cost of moving was also a factor as new landlords would be less inclined to offer short leases with break options.
- Zest's existing space and location suited their business. To move towns was impractical and, while there were good alternatives in Leatherhead, there was no compelling reason to relocate. Leatherhead House is close to the station and town centre, Zest's suite is well fitted out and the landlord has agreed to refurbish toilets in the common areas to bring them up to standard.
Were there any issues along the way?
The main issue was timing as Zest's sublease expired a month before the head lease and they did not have an automatic right to renewal.
This highlights how important it is for occupiers with unprotected leases to initiate dialogue with landlords early enough to allow time to agree new terms or move if this is not possible.
What are the plans for the surplus space?
We believe that the space released will be used as temporary accommodation for another tenant on the estate while their space is refurbished.
SHW Business Space Partner Mark Skelton said: "This was a good result for all parties as JLT and Zest achieved competitive, flexible terms and avoided the cost and disruption of moving, while the landlord retained two high-calibre tenants."
