What happens when negotiations reach an impasse during a rent review?

The team at O’Neill & Co. are highly experienced property negotiators, regularly working on behalf of our clients to reach successful agreements on rent reviews or more complex lease restructuring.

Whilst most rent reviews are settled outside of the arbitration process, there are times when our surveyors are required to present a client’s case to an arbitrator.

The Challenge

A prominent national company was leasing our client’s valuable central commercial property, and as per the lease, a rent review was due. Market trends suggesting an increase in the market rent and following several rounds of negotiations to settle the rent review settlement could not be reached.

A commercial lease will contain a mechanism in the rent review clause for when such an impasse is reached in the rent review negotiation process. The case can be referred to a third-party arbitrator, who is normally appointed by the President of the day of the Society of Chartered Surveyors SCSI or the Law Society. This arbitrator hears evidence from both parties’ perspectives and makes a binding decision.

The timing of this particular case made for a formidable challenge for O’Neill & Co. given the date of the rent review being during the COVID lockdowns, business closures and general uncertainty in the marketplace.

O’Neill & Co.’s Strategy

Thorough Market Analysis: The first step in any rent review negotiation is a comprehensive analysis of the current real estate market (lease comparables). O’Neill & Co. delved deep into data, looking at comparable properties, rental trends, and economic indicators that justified the rent increase, presenting it to the client in the first instance to the rent review surveyor acting for the tenant and subsequently to the appointed arbitrator later.

Leveraging Expertise: O’Neill & Co. used their extensive knowledge of property valuation and market dynamics to present a compelling case. Our team highlighted the appreciation of the property’s value and demonstrated how the rental rates were lagging behind market standards, particularly due to the property’s busy town centre location.

Open and Transparent Communication: Effective communication is the cornerstone of successful negotiations. Our team maintained open, transparent, and respectful dialogue, ensuring that all parties felt heard and valued throughout the process.

The Successful Result

After presenting a meticulously crafted case, O’Neill & Co. successfully convinced the arbitrator that the rent review proposal was a fair and reasonable one for the property in question. This achievement was not only a financial win for the property owner but also a testament to the value and power of expertise, strategy, and effective communication.

Conclusion

This case serves as a reminder of the vital role that professionals in the real estate industry play. Rent review negotiations can be daunting, especially when facing a large national company, but with the right strategy, knowledge, and communication skills, success is attainable. In such cases it is always advisable to engage the services of a skilled chartered surveyor who can navigate the complexities of real estate, ensuring that their clients’ interests are protected and their investments optimised.

For Rent Review enquiries please contact:
Stephen Keeler
or
Darac O’Neill

Slate Office REIT, a global owner and operator of high-quality workplace real estate, acquired a modern, well-located office property in Kildare’s capital town of Naas in 2022, as part of a $255M acquisition of Yew Grove REIT Plc, an Irish entity that owned a portfolio of office, life sciences and lite-industrial real estate in Ireland.

Slate has a proactive and hands-on approach to managing their portfolio. Working collaboratively with O’Neill & Co, Slate successfully let 10,400 sq. ft. of office space in Chestnut House, Millenium Park, Naas, last month under a long-term lease with Kildare and Wicklow Education and Training Board (KWETB).

KWETB have acquired suitably large modern office space in an ideal office location in Millenium Park’s 400-acre site in the northwest quadrant of Naas.

Leasing Agent Darac O’Neill of O’Neill & Co. in Naas, observed: ‘Within Millenium Park, Naas, KWETB found all of the elements they were looking for: a large, modern, high-spec unit with ample parking for staff. This is a great boost for the Kildare office market, and for Naas in particular, which further strengthens the town’s appeal to local and international businesses.’

The ongoing conflict in Ukraine has resulted in millions of people being displaced from their homes, many of whom have sought refuge in other countries. Ireland has been one of the countries that has opened its doors to Ukrainian refugees, offering them the chance for temporary protection in a safe and welcoming environment.

In Ireland, local authorities are responsible for providing accommodation to Ukrainian refugees. The government has set up a dedicated programme to support local authorities in this regard, with the aim of providing suitable accommodation for all refugees.

Kildare County Council appointed O’Neill & Co. to inspect all properties offered throughout County Kildare to assess their suitability. Working on behalf of Kildare County Council, our Associate Surveyor, Cian O’Sullivan has already inspected over 100 properties since September 2022.

In assessing the pledged properties, Cian has reviewed a range of accommodation types, from apartments to holiday homes, ensuring they meet all requirements specified by Kildare County Council.

Commenting on his involvement in this scheme, Cian said ‘I have enjoyed working closely with Kildare County Council to ensure the refugees can be housed in a timely manner and in accommodation that suits their needs. We also provided advice to the homeowners and licensors. It’s been a pleasure to meet those pledging their homes in an effort to alleviate some of the stress already on Ukrainian families fleeing their home country.’

Find more information on the scheme here

O’Neill & Co. has been appointed as letting agents of a new warehouse development: Unit 15, in Osberstown Business Park, Naas, Co. Kildare. The development, which has an expected completion date of Q4 2023, is the first speculative development in Kildare in a number of years.

The development which will comprise a detached industrial / warehouse unit(s) with office facility buildings will be built to the highest quality standard with key sustainability considerations in mind, and will be certified LEED Silver. The development will have a A3 BER energy rating.

Osberstown Business Park is located on the Caragh Road, approximately 3km west of Naas town centre, with substantial frontage to the M7 Motorway. The Park is situated just 4 minutes’ drive from the new Junction 9a on the M7 Motorway providing swift access to both Dublin and the south and south west of the country.

The overall property will comprise 2,024 sqm (21,786 sq ft) on a total site area of 0.91 Ha. The property can be divided into two separate units with each unit comprising 1,102 sqm (10,893 sq ft) of warehouse and ancillary office accommodation.

Darac O’Neill of O’Neill & Co commented: “Osberstown Business Park’s enhanced access to Junction 9a of the M7 Motorway will see the park become a favoured destination for occupiers. The property represents an ideal opportunity as a logistics and/or manufacturing facility”.

Price on application.

For further details contact:

Darac O’Neill

O’Neill & Co Chartered Surveyors & Auctioneers

045 856 604 or 087 965 6063

Tell us a little about yourself?

I am a mother of 4 wonderful children: 3 boys and 1 girl, which keeps me busy outside of my work life. I enjoy spending time outdoors with my family and I have recently become a scout leader in our local group where I organise hikes and camps. I also love sea swimming and cycling and I’m currently training for a triathalon.

How long have you worked in property management?
I’ve worked in Property Management for over 15 years.

How long have you worked with O’Neill and Co.?
I joined in February of this year but it feels like longer; everyone has been very welcoming and there’s a great team spirit. It’s a busy role but I was able to hit the ground running straight away. I had worked with Darac many moons ago in another property company, so that helped me settle in quickly too.

Tell us about your role as Property Manager with O’Neill & Co?
In general, my responsibilities include: client management and reporting, managing outsourced contractors, setting and collecting rent, handling maintenance requests, lease renewals and rent reviews, and setting the budget and controlling expenditure for the property. 

What do you like most about your role at O’Neill & Co.?
I like the variety of the portfolio which includes the M7 Business Park among others. I get to apply my qualifications, training and experience in property management, working with great clients: problem-solving, planning and budgeting.

It’s also an advantage to work with such a well-respected and highly regarded brand. Darac and the team have grown a business with a reputation for integrity, expertise, open communication and genuine helpfulness and friendliness. They’ve built strong ties among a range of stakeholders from local business owners to international brands, and with a nationwide network of Chartered Surveyors; all of which help me in my role and enhance my own career.

The fact that the majority of our clients are returning clients and the company has won business based on recommendations from existing clients and tenants really highlights the quality of the work we do at O’Neill & Co. It’s nice to be associated with such a strong local brand.  

Describe a typical day at O’Neill & Co.
No two days are the same; I work on different properties throughout the week. Depending on the property I could be looking at tendering for an upcoming budget, arranging works to the common areas or to the property, reviewing maintenance schedules, carrying out site visit, or organising repairs to be carried out by a third-party contractor. Another day I could be meeting clients and reviewing projects, renewing insurance, reviewing leases, contacting tenants about arrears. The days are busy but I love the variety. 

What advice would you give to property owners when looking for a property management company?

• Take a look at the properties that the agent currently manages to see if you would be satisfied with the way they are managed.
• Speak with the person who will be managing your portfolio and discuss how they envisage your property being managed; ask as many questions as possible to ensure that you are comfortable with their experience and will provide the level of input you would expect.
• Look for recommendations from people you know and who have engaged with property management companies before. 

We are delighted to have Donna on board and she is proving a popular property manager with our clients. If you would like to discuss our Property Management Services, please contact the office on 045 856604.

We are delighted to partner with John Ryan of Bagnall Doyle MacMahon to bring this substantial licensed premises in Celbridge to market.

Strategically located on the busy Celbridge to Maynooth Road (R405), this property sits on c.0.92 ha / 2.3 acres offering alternative development potential to buyers.

The property benefits from valuable rental income from 2 adjoining businesses as well as from 2 phone masts on the roof of the property.

Description

Henry Grattan’s is a substantial, single-storey licensed premises extending to c.751 sqm / 8,083 sq ft. which has been refurbished to a very high standard and is presented in excellent condition throughout.

The accommodation briefly comprises a traditional style public bar with timber flooring and a feature fireplace; a large lounge bar with semi-circular bar counter, raised seating area and a feature place and a separate, self-contained restaurant / function room. In addition, there is a fully fitted and equipped catering kitchen with ample dry goods storage areas and staff changing facilities. There is a central keg store and cold room with rear delivery access. Outside, there is a large and extensive car park with car parking for approximately 80 cars and a green open space.

Adjoining the licensed premises are two investment properties: Bar One Racing bookmakers (c. 105 sq m / 1,130 sq ft) and Ramon Massey funeral home (c. 88 sqm / 947 sq ft). Both tenants are unaffected by the sale. There are two phone masts located on the roof providing additional rental income.

Features

• Investment opportunity
• Situated in densely populated residential area
• Close to a host of new housing developments
• Alternative use potential
• Additional valuable rental income

For more information please contact Darac O’Neill on 087 965 6063 or 045 856 604

View the online brochure

Here’s our take on last year and our hopes for this year when it comes to property. We focus on Co. Kildare and surrounding counties but with an eye on the national context. Though we touch on all types of property, the emphasis, as you would expect,  is on our specialism – commercial property”.

We talked last time about making the decision on whether to lease or buy your commercial property. Read the blog here if you missed it. If you choose to lease, you need to be aware that the lease is a legal contract. In Part I of a two-part blog, we look at setting the rent, rent reviews and the term of the lease.

What is a lease?

A lease is a legal contract between a tenant and a landlord setting out each party’s rights and legal obligations when it comes to the property in question. Yes, it is a binding legal document and, as such, should not be entered into lightly.

Commercial eases are not always straightforward agreements between an owner and a tenant. Consider the case where an investor owns the freehold of the building and leases it to a tenant. A second tenant may take an assignment of the lease from the original tenant, taking on the original tenant’s rights. That assignee may further lease the building or part of it – in other words sub-let it. So you can see how it can get complicated.

Setting the rent

The expertise of a chartered surveyor, preferably a local expert, is vital in negotiating the rent. He or she knows the specific market conditions at play and any local peculiarities that may give you (tenant or landlord) the upper hand. Tenants may be able to negotiate a rent-free period – again, your chartered surveyor will be able to advise you on whether that would be reasonable. While conditions are improving, commercial rents are still considered to be from 13% (for office space) to 63% (industrial space) behind 2007 levels.

Bargaining power

A tenant’s negotiating power depends on where he or she is in the chain. If a tenant is entering into an agreement directly with a landlord, say, the two parties can negotiate terms. If he or she is sub-letting, they will have to accept the terms already agreed in the original lease, unless they manage to agree changes directly with the freeholder. These amendments are contained in what is called a Deed of Rectification.

With a new lease, your bargaining position really depends on the state of the property market. This is where the advice of your chartered surveyor will be invaluable.

Term of the lease

If you are a tenant and are just starting out in business or going through flux, go for a shorter term commercial lease (say one to two years). In the case of longer leases, there should be provision for rent reviews – typically every three or five years. Rent reviews are a thorny subject – more on that later.

It is important to point out that the tenant will be liable for the rent, rates and other costs included in the contract for the full term of the lease, whether or not they are trading, unless of course they assign the lease to someone else. Be aware that a tenant can only sub-let if there is a provision for it in the original lease.

Rent reviews

New or existing commercial leases will set out the pattern of rent reviews, usually at three- or five-year intervals. Since February 2010, rent can be negotiated down at a rent review. However, if you are sub-letting based a pre-2010 lease you will find that a ‘new’ rent cannot legally go below what is currently being paid regardless of the market conditions at play.

Remember that where your lease began post 2010, your rent could well have been set at an historically low level, so expect your landlord to increase it to what is reflected in the current market at the earliest opportunity – a much more competitive space because of the shortage of new commercial space and recovery-fuelled demand.

Part II of the blog covers security of tenure, repair and upkeep and use of the building. Click here to read it.

We cannot stress how important it is that both tenant and landlord be rigorous about making sure they understand the terms of the lease and their potential ramifications.

O’Neill & Co is at your disposal for the full range of landlord and tenant issues, including advice on leases, landlord and tenant law, specialist rent review advice and negotiation of rent at review, by agreement or arbitration. We specialise in offering strategic advice on the implementation of rent reviews in multi-tenanted buildings and shopping centres.

Don’t hesitate to call us with your question on 045 856604, whether you are a tenant or landlord.

Newer, better equipped and let’s just say it, nicer, commercial premises can do so much for how you are perceived by customers, suppliers and other stakeholders. In the first of a series of blogs we look at the issues involved in moving up in the world, starting with why you should be trading up your commercial premises in 2015.

Is 2015 going to be your year? According to the ESRI, the index of current economic conditions shows signs of improvement, increasing from 95.7 in November to 100.4 in December 2014. Employment levels are steadily moving upwards. Private consumer expenditure is up along with other key economic indicators.

Hopefully you’re feeling the uplift too. You’ve been mulling over it for some time; perhaps 2015 is the year to expand, take on new staff, make a serious investment in that new product or market or just move to better premises? Rest assured; at O’Neill & Co, we don’t just help you find the right place – our in-depth commercial property knowledge means we can give you a realistic assessment of any property you’re looking at with a view to how it meets your business objectives.

There are numerous reasons for considering a move:

You need to be where people are

If you’re depending on passing trade, your location is one of the most important business decisions you have to make. Perhaps you can now afford somewhere with better footfall potential, perhaps in a classier area. Your business could be better located beside other similar businesses. Look at Naas – A Nice Place to Shop – as the battered brown sign on the old N7 used to say. Because it had a cluster of ladies’ boutiques – perhaps due to its location close to three important racecourses – it became a destination for ‘big occasion’ shoppers, attracting even more boutiques. Francis Street in Dublin is known for antique dealers. It’s where people interested in buying antique furniture or objets d’art go. If that’s your target market, that’s where you need to have your shop.

Do your premises reflect your brand?

If your brand is slick and professional, your place of business needs to back that up. Even if your customers never need to come anywhere near your centre of operations, other stakeholders do, not least your employees. Let’s face it, if you want to attract the brightest talent, there can’t be a mismatch between your brand values and your offices. Don’t underestimate the effect on morale that a workplace can have. So if you’ve done a rebranding exercise, ask yourself if your place of business backs up your story.

You could do with better services

Let 2015 be the year you can say ‘bye bye’ to the barely-there broadband, the pathetic water pressure that makes production impossible, the fact that your customers have to park in a field or whatever the specific headache is that you have been putting up with. A move to a better place could make your life so much easier and your productivity so much higher.

Your core business activities have changed

If you’ve refocused your activities, your existing set up may just not be practical anymore. Many businesses had to look for alternative sources of business in the downturn and many of those alternative activities have become the mainstay, requiring different sorts of accommodation.

I know of a printing business that went into large format signage as there seemed to be a demand for it. Due to the success of this new direction, they’ve had to buy new premises to accommodate the larger printing presses and workshop requirements.

If 2015 is the year in which you move up in the world, O’Neill & Co can help you find new, more appropriate premises whether it’s warehousing, a workshop, showroom, retail unit or penthouse office space with a rooftop garden!

If you need to sell or let the space you are currently occupying in order to make the move, that is, of course, our area of expertise. If we can be of any assistance, call us on 045 856604.

If your desire to upscale is a little more complicated, look out for specific blogs on valuation, commercial rates, tenant and landlord disputes and compulsory purchase orders. In the meantime, if any of these issues is topical, have a look at the services section of our website to get an overview of how we can help you.