Front Street Rents

[mercuryg]

"Johnson's shoe shop, which seems to have come to a sudden stop where renovation is concerned"

 

If the owners were not asking extortionate rent for this shop I have no doubt it would be occupied - it's in THE prime position in the town. I have mentioned before that I was trying to secure it, a couple of years back, for a friend who wanted to open a shop; then, they were asking £14,000 p.a.

[threegee]

"Johnson's shoe shop, which seems to have come to a sudden stop where renovation is concerned"

 

If the owners were not asking extortionate rent for this shop I have no doubt it would be occupied - it's in THE prime position in the town. I have mentioned before that I was trying to secure it, a couple of years back, for a friend who wanted to open a shop; then, they were asking £14,000 p.a.

 

Everything is negotiable!  Keep going back to them regularly and offering what you reckon is a fair rent.  Hopefully you'll catch them at a time when the Council Tax / Insurance / Repair bill land, and they'll then see the merits of someone else having to pay them.

 

Saying that it's THE prime position in the town won't help your case either. There are lots of good positions in the town and it really depends what for.  If it's not let then clearly it isn't THE prime position in the town for anything, at the rent they are asking!

[mercuryg]

Everything is negotiable!  Keep going back to them regularly and offering what you reckon is a fair rent.  Hopefully you'll catch them at a time when the Council Tax / Insurance / Repair bill land, and they'll then see the merits of someone else having to pay them.

 

Saying that it's THE prime position in the town won't help your case either. There are lots of good positions in the town and it really depends what for.  If it's not let then clearly it isn't THE prime position in the town for anything, at the rent they are asking!

 

I'm no longer in the market; I doubt that negotiation would help - we tried, as did others, to no avail. The owner seems in no rush to lease at any price. I would never have told them it was in the prime position when I was looking at it - I'm far more business savvy than that - but the fact remains it is.

[Andy Millne]

Everything is negotiable!  Keep going back to them regularly and offering what you reckon is a fair rent.  Hopefully you'll catch them at a time when the Council Tax / Insurance / Repair bill land, and they'll then see the merits of someone else having to pay them.

 

This is good advice. If you work out a (realistic) fair rent by looking at the deal from both sides and show you really are determined you may be surprised what kind of a deal can be achieved. If you offer a low rent and then just sit on your hands you're likely to be seen as just another time waster. It's probably quite reassuring to a landlord when a tenant negotiates properly a rental price and is persistent. It shows that you may just be in business long enough to justify the tenancy.

 

Contrary to popular belief not all landlords demand sky high rents. A good return on investment is what they want and a good long term reliable tenant is preferable to one paying the full asking price for 12 months.

 

Price is not the only tool in negotiating remember.

[Adam Hogg]

Clive Johnson does not seem to be in a rush to do anything even tidy up the Ashington Shop, to sum it up the council trip/landfill is more tidy then his Ashington Shop.

[mercuryg]

Well, Fourgee, I am aware of the practice of negotiation! However, my personal involvement in trying to secure that particular shop confirmed what Adam adds- the owner is not interested in negotiating. In fact, when we first showed an interest the rent was £12000p/a. Next time we spoke - days later - it had been hiked to £14000. I'm not the only one who found this; one person wanted to open a coffee shop there, found it overpriced and non-negotiable, and promptly took premises further up the street. There is simply no incentive on the part of private landlords to respond to lower rents.

 

Furthermore, there is the subject of commercial premises rates mitigation; if premises are empty there is a 3 month void period in which rates are non-payable; after this, full rates apply. Once the property has been occupied for 43 days, the cycle starts again. There are companies who offer to use premises for storage or other means - rendering them 'occupied' - for the 43day period, and then move out afterwards. Thus, a great saving on rates on empty properties. I wonder if Mr Johnson is aware of this.....

[Malcolm Robinson]

Thanks Merc!  Need to check that out!  

[threegee]

..There is simply no incentive on the part of private landlords to respond to lower rents.

 

Sorry, but that bit is nonsense!  There are several reasons why a landlord wants to see a property occupied, and they are in no way insulated from market forces.  But the quality of a tenant has to be taken into consideration too.  Potential tenants who do all their homework have a much better chance of securing a better property; but few do, and you can't blame landlords for becoming jaded through hopeless propositions.

 

Now Clive might not be the brightest bulb on the Christmas tree, and he may not be the best business person in town, but he's not stupid.  And, my point is going back at the right time - having done all the homework - will surely produce a deal.  The property standing empty is costing him far more than the rates.

 

I'm not aware of anyone in Bedlington who uses the occupancy rules simply to avoid business rates.  It's generally asking for hassle, but if you spot any be sure to name and shame here.  The sort of thing you mention is criminal, because the occupancy then attracts rates immediately, and if there is intention not to pay then that's fraud.  Anyone who even offered such a "service" would be open to criminal charges, and any participating landlord would be complicit.

[mercuryg]

"The sort of thing you mention is criminal..."

 

On the contrary; it's a perfectly legal loophole. I have been involved in creating website copy for companies that offer services in this area;  See here: http://www.bllaw.co.uk/services_for_businesses/commercial_real_estate/news_and_updates/empty_property_rates.aspx - in particular the section on 'short term letting' and note that the void period for industrial units is six months. 

 

**I might add that, during the 43 day period, full rates must be paid. For the record, one company I did the work for stores insulation products in the premises.

Edited April 18, 2014 by mercuryg

[mercuryg]

"There are several reasons why a landlord wants to see a property occupied,"

 

I speak from my own personal experience; I'm not stupid either, and attempted negotiation didn't help.

[Andy Millne]

**I might add that, during the 43 day period, full rates must be paid. For the record, one company I did the work for stores insulation products in the premises.

 

Yes a genuine occupancy is a different matter but even a short term license to occupy of 6 weeks has costs associated with it and as 3g states it's asking for hassle when it comes to disputes over repairs and such. An agreement still needs to be in place for these eventualities. There is absolutely nothing for a landlord to gain from a property being empty and a lot to lose. The timing and circumstances may not have been right for your potential agreement for this particular property/landlord but to say there is no incentive to respond to negotiation by landlords in general is a very one sided view in my opinion.

[mercuryg]

"to say there is no incentive to respond to negotiation by landlords in general is a very one sided view in my opinion."

 

I couldn't agree more, but the other side of the argument is:why are these properties standing empty? I would venture that it's because those wishing to rent - and I've been involved in more than one instance - are not able to afford the prices asked by the owners, who are similarly not willing to budge.

 

"even a short term license to occupy of 6 weeks has costs associated with it"

 

Indeed, but a lot less than permanent occupancy when rates are suspended once its over.

[threegee]

The link you provide is a solicitor offering genuine mitigation strategies, not a service to evade commercial rates. They repeatedly stress that the circumstances should be genuine (i.e. not manufactured to avoid).  They also warn about illegal services: "Beware of scam tenancies offered on the web..".

 

But you are entirely missing the point here, because as fourgee says you are looking at things one-sidedly.  And, I most certainly don't think you, or indeed anyone else, is stupid!  I do however think that you are misrepresenting the reality.  Other people reading this may take away a slanted view of landlords, and just why properties are standing empty.  There are plenty of people who will buy into such myths, because it suits their agenda, and deflects the blame from their own anti-business mindset.  I don't think that this is what you intend, and I don't think you yourself are in any way anti-business.

 

I get to see things from both sides, and, together with a lifetimes experience in retailing, often get provided with a peek into the commercial market in the North East from more than one of the well known names.  Believe me the situation is little to do with greedy and stupid landlords asking unrealistic rents, and a lot more to do with a general lack of enterprise.  There are failures on both sides; failures in local government; failures in national policy; and a lamentably low level of small enterprise, brought about by a century of carefully taught state dependency.  It's not that there aren't just as many enterprising people here as elsewhere in the UK, it's just that the vast majority of them have - very understandably - given up on the North East. Just when there are a few glimmers of redemption (not the least from the Labour Party, the very architects of state dependency) there's a grave danger that we'll talk ourself back into our hole!  That's why I'm challenging your view of unreasonable landlords.

 

Back on subject I'd say that business rates are just a small part of running a business, and even the rents are (or should be) dwarfed by employment costs.  Did your associate produce a fully-worked business plan?  If so (s)he'd have benefited by providing a copy to the prospective landlord(s).  If nothing else (s)he might have got some useful feedback.  Of course such a plan would have had to factor in the proprietors income expectations too.  In real-world situations businesses never go to plan, but that doesn't mean that plans are a waste of time or unnecessary.  They provide a much-needed benchmark.  Some landlords - approached with the right mindset - can see, or be made to see, themselves as partners in the business, as they are effectively providing a very necessary part of the capital.  They have an interest in the success of the business, and in bad times can often make necessary concessions if kept in-the-loop.

 

What I detect here are hard-nosed take-it-or-leave-it attitudes, and I believe that one such response invites another.  There's never finality in business, and being snubbed (or believing you've been) is no reason not to try again and again at later dates with modified propositions.  And, it's often better to ask what the other parties aims and expectations are than ask the price.  Going into a negotiation with a target price in mind is pointless unless you know exactly what you are going to receive for the money.

[mercuryg]

"The link you provide is a solicitor offering genuine mitigation strategies, not a service to evade commercial rates."

 

Of course they're genuine, but they are ways to 'evade commercial rates' - that is, after all, what they achieve!

 

"Believe me the situation is little to do with greedy and stupid landlords asking unrealistic rents, and a lot more to do with a general lack of enterprise."

 

Naturally this is part of the problem; I would suggest that a lack of originality in thinking also comes into play. One small town can only sustain so many hair and beauty salons and tattoo parlours, after all. Then, of course, there's the difficulty in getting start up help; the demise of Go Wansbeck hasn't helped and, as the final client of Wansbeck Works, I can only feel for people looking to make a genuine start in business.

 

"...and I don't think you yourself are in any way anti-business"

 

I'm not sure why anyone would be?

 

Understand, I am talking of my experience with a handful of retail properties in a specific location; I am not expert on rents and rates across the North East, and have no doubt that there are landlords who would be happy to negotiate. I, unfortunately, didn't find them, and my friend's subsequent experience - she eventually did open a business on the Front Street, although not in the field she had originally intended - was not a happy one either. I shall refrain from naming it!

 

As for me, find me well-priced office space in the town and I'll gladly take it.

[Andy Millne]

As for me, find me well-priced office space in the town and I'll gladly take it.

 

PM Sent