If you are looking for new offices you will no doubt have decided upon the physical characteristics of the property you are looking for including: type - new, old, air-conditioned, self-contained or part of a larger block; size and number of parking spaces; location and budget. But you may not have considered the terms of the lease that will best suit your business needs and, at the same time, be achievable bearing in mind current market conditions. It is a mistake to leave this entirely to your solicitor or agent/surveyor. Firstly, they do not know your company's financial policies or it's plans. Secondly, and sometimes disastrously some practitioners work in a highly adversarial manner. They do not understand the win-win principle of negotiation which is particularly important in buoyant markets where landlords can be selective as to who they let their property to. Two Critical Lease Terms There are two important lease terms that should be carefully considered:-   1. How many years are you prepared to sign a lease for? And, are you prepared to sign a lease for longer than you may require, taking a commercial view that the lease be assigned or the property sub-let? and,   2. What level of responsibility are you prepared to accept for the maintenance of a property, both for dealing with it and paying for it? If you want a short lease with few responsibilities other than to pay rent then, like it or not, you may well have to go beyond your 'comfort zone' to get the property you want. The reason for this is that your prospective landlord has a very different agenda. With shareholders, pensioners are assurance policy holders interests to think of, he is likely to want a long lease, say, 10 years minimum and he will want to pass on the whole of the responsibility for the property in the form of a full repairing lease or service charge to the tenant. Given that a tenant and landlord usually have different views on these two basic terms, then the actual outcome of a specific transaction will depend on the negotiating strength of the parties. This, in turn will principally depend on market conditions. In this respect you will no doubt be aware that the landlords position is improving as the surplus accommodation of the last few years is mopped-up by increasing tenant demand. furthermore, with very little speculative development in the pipeline, the market is likely to get tighter. That said, you should also appreciate that much depends on the age and condition of the property involved, and it's location. There is a world of difference between a tip-top building in Mayfair, and a 1960's building in the poorer outer suburbs requiring refurbishment. In the former case, you are very likely to have to sign a long lease and accept a full repairing liability. But in the latter case you can expect to negotiate a short lease and would be very foolhardy not to negotiate a capped service charge. There are of course other lease terms to consider such as rent review frequency and sub-letting/assignment but these probably are best dealt with in discussion with your surveyor or solicitor. Put Your Best Foot Forward These terms and quite a few others will have to be negotiated including, of course the rent and any tenants incentives/concessions such as rent free periods, but before entering negotiations it is helpful to prepare yourself to impress the landlord and thereby improve your negotiating position. Firstly, if you are a financially strong company relative to the property involved then make sure the landlord knows this at the outset - give his agent copies of your corporate brochure and any other supporting material, ideally your Report and Accounts showing net profits after the prospective rent is paid of more than three times the prospective rent. The landlord will also want to know that you are a responsible tenant who will take good care of his property, and that you will pay the rent promptly. The best way to demonstrate this is with references from your bank and from a previous landlord. You will normally be required to provide these when terms are agreed so you may as well line them up and announce their availability at an early stage. Solicitors Preparing leases for commercial property has become an increasingly complex job - most leases run to more than fifty pages! There is a constant flow of case law to be monitored and new legislation absorbed. It is therefore helpful to choose a solicitor experienced in this work, and for whom you have a worthwhile recommendation. The work is important and I believe your solicitor should be remunerated accordingly. All to often we have encountered time consuming arguments between solicitors that can if left unsupervised cause deals to fall through. In these circumstances it is important for the client to carefully consider the points at issue and, if necessary, intervene to effect a resolution. If there are sufficient outstanding contested points, and there is time pressure, then we often recommend that both parties and/or their agents meet with the solicitors to 'thrash out' and agreement. Prior to such a meeting you should first establish the points which are deal breakers e.g. the landlord wants a ten year term and you will only go to five. Frankly, there is little point in proceeding unless these are resolved prior to the meeting. You then need to prioritise the outstanding points and consider how you might trade these with the landlord. You may also find your solicitor is concerned about an issue upon which you are prepared to take a commercial view or, even better, use as a concession to gain a more important advantage elsewhere e.g. your landlord may require a landlords break-clause if he should want to re-develop the property. You may take the view that it will not be the end of the world so long as you have adequate notice and perhaps the landlord will accept an internal liability only in exchange. Gazumping A feature of the leasing process is that agreements are made 'subject to contract' and they are thus not binding until the lease is signed. The potentially serious consequence of this is that your prospective landlord can accept a higher or better bid and leave you with abortive costs and a disrupted programme for moving. At worst a business can become homeless and I have no doubt this has, on occasion, caused business failures. If you absolutely have to move then it is worthwhile insisting on a 'lock-out agreement'. This is a contract that will give you an exclusive period within which to complete a lease. This will go some way to safeguard you from being gazumped but bear in mind you may have to pay for it. Agents The benefits of employing a competent agent are substantial. Besides giving you improved access to the market you will have the peace of mind that the property is inspected and enquiries made to check that it is a satisfactory acquisition. You can also take comfort from the fact that the terms have been negotiated from a position of strength based on a good knowledge of the market. You should decide what style of agency is appropriate. If you are desperate to find premises and are prepared to commit a lot of your own time then you can appoint several agents on a multiple basis. This means you will only pay the agent who introduces the property you acquire and if you find your own property then no commission is paid. On the other hand if you have insufficient time to look for property then it will probably be more appropriate to appoint a sole agent on the understanding that you expect the agent to actively search for property on your behalf, and provide you with regular reports on progress. The agent will be encouraged to provide this higher standard of service in the knowledge he is not in competition with other agents. Conclusion In various sectors of the London office market there is now a shortage of accommodation. Acquisitions can thus be very difficult to achieve. You will need to be fully prepared for the task. I therefore recommend that strategic planning with your agent and solicitor should take place well in advance of the move date, so that this critical part of your business is dealt with properly. Prepared by Laurie Gilmore FRICS Boston Gilmore, London W14