Hidden overcharging and what to do about it

The ‘Bright Building’ in Manchester Science Park didn’t quite live up to its name!

How would you feel if you discovered your landlord had been overcharging your business for the last 6 years? More importantly, how would you get your money back?

It is a fact of life that mistakes can happen. In commercial property one of the simplest and most common sources of error is floor areas. The problems start when tenants assume, not unreasonably you would think, that the floor areas quoted to them are accurate. Regrettably, this is often not the case which can lead to some pretty expensive mistakes.

Take the case of a software development company we advised recently. They were one of the first tenants to move into the ‘Bright Building’ in Manchester Science Park, around six years ago.

Last year the business needed more space. So it decided to move into a bigger suite elsewhere in the building. However, before signing the new lease its solicitor recommended that it take independent property advice. We were recommended to them at that point. 

One of the first things we do in circumstances like this is to physically measure the client’s office space, both the existing and the new. It sounds simple but measuring office space is not quite as straightforward as you might think. There are conventions, professional codes of conduct and even case law that need to be observed. So there is plenty of scope for errors to occur.

In this case, we discovered that the floor area of the suite was 14% smaller than had originally been quoted. This meant that over six years the tenant had been charged £35,500 in rent, service charge and building insurance for space it physically did not have. Having discovered this, what could be done? Could they get their money back or was it too late?

Thankfully, when confronted with the evidence the landlord in question accepted that an error had been made. To their credit, they agreed to pay back all the overpaid sums in the form of an extra rent-free incentive. This persuaded the tenant to press ahead with the new letting but not before we negotiated some additional enhancements to the lease terms.

The CEO was pleased to have had TAG’s input saying; ‘Thank you for all your help, and sharing your experience with us during this project - it was much needed, and hugely appreciated.’

The CEO was pleased to have had TAG’s input saying; ‘Thank you for all your help, and sharing your experience with us during this project - it was much needed, and hugely appreciated.’

This example involved a relatively small letting of just 1,600 sq.ft. and is by no means an exceptional case. I could point to even greater discrepancies involving much larger floor areas that have gone on for longer. So please, always instruct an independent surveyor to check your heads of terms before you sign a new lease and ensure that they physically measure the floor area of the space you are taking. The savings that result might surprise you!

If you would like more information about our due diligence services, please call Martyn Markland on 0161 457 1422 or email him at mm@tenantag.co.uk.

Westlab land at Oxford Court

Oxford Court should provide Westlab with the perfect antidote to Manchester’s bustling city centre.

Westlab’s head office team were looking for a more permanent home in Manchester city centre but needed somewhere that matched the calmness and tranquillity of their wellness brand.

Serviced offices are all very well, but sometimes a business needs its own dedicated space. That was the conclusion reached by Westlab, one of the UK’s leading Bath Salts brands.

Westlab recently grew its head office team to fifteen which took it beyond the natural ‘tipping point’ for serviced offices. Generally speaking, this is reached when you exceed twelve desks. Any more desks than this and conventional leased offices tend to be more cost-effective.

TAG were recommended to Westlab by one of their investors. Based on their brief, we estimated that the space requirement would be between 1,250-1,500 sq.ft..

 The suite that was eventually acquired on the Fourth Floor of 15 Oxford Court measures 1,364 sq.ft. so right in the middle of the target size range. The quality of natural light and generous ceiling heights make the suite feel bigger due to its bright and airy feel.

It is worth pointing out that the quoted floor area of the suite was 1,392 sq.ft.. The result of our independent check measurement was a reduction of 2.08%. This was agreed with the Landlord’s surveyor as the correct Net Internal Area of the suite so was used as the basis for the rent calculation.  

The suite was delivered by the landlord to an enhanced CAT A specification which included a kitchenette, a meeting room and a private office with glazed partitioning. The building itself features air conditioning and raised access floors making it both comfortable and flexible in use. These aspects and the slightly smaller footprint helped make it a more cost-effective property solution for the business than some of the other available options.

A new five year lease was negotiated inclusive of a Tenant-only Break Option at the end of the third year. The lease also benefits from the security of tenure provisions of the 1954 Landlord & Tenant Act which means Westlab will have a statutory right to renew its’ lease in five years’ time. There are rent-free periods included as part of the deal and the service charge will be subject to annual CPI inflation linked cap.

If you would like help with identifying a new office for your business whether it be in Manchester or elsewhere in the UK, please call Martyn Markland on 0161 457 1422 or email him at mm@tenantag.co.uk.

BoConcept decide to sit tight

Danish furniture brand BoConcept has renewed its lease at the MM2 Building on Great Ancoats Street.

TAG was first appointed by BoConcept back in 2012 when it negotiated a new 10 year lease on a prominent retail showroom premises on Great Ancoats Street in Manchester’s Northern Quarter. Ten years later and TAG’s services were called upon once again, this time to advise the franchisee on its lease renewal options.

As we all know, the physical retail sector has suffered terribly in recent years due to internet shopping and then more recently, the COVID pandemic. However, amidst the gloom there have been occasional rays of hope. Luxury designer furniture being one such example.

It seems that as people have spent more time working from home, their average spend on sofas, tables and chairs has gone up. So much so that during lockdown, sales of luxury designer furniture boomed!

So when Denmark’s best known luxury furniture brand, BoConcept, faced an imminent lease expiry in its Manchester showroom it was understandable that it wanted to scout the market for new and exciting opportunities.

TAG was appointed to undertake a comprehensive search across Greater Manchester. We looked at all manner of opportunities ranging from high streets to retail parks. Eventually we had a shortlist developed which included the existing 4,000 sq.ft. showroom on Great Ancoats.

We invited landlords to put forward their best lease terms and detailed analysis was undertaken of fit-out costs, pedestrian flows and occupation costs.

In the end, the terms offered by BoConcept’s current landlord meant relocation was difficult to justify against the risks posed by having to establish a new customer location and contend with the capital expenditure of a major retail fit-out.

A new 10 year lease was therefore agreed along with a tenant only break option at the end of the fifth year. A modest increase in the rent was agreed and the tenant’s repairing liability is limited by a Schedule of Condition.

If you would like advice on your lease renewal options, please call Martyn Markland on 0161 457 1422 or email him at mm@tenantag.co.uk.

Forbes search launched

The Manchester office of Forbes Solicitors is based in Church House which is undergoing a comprehensive refurbishment.

Forbes are a regional law firm with a 200 year history and 12 offices across the North of England. They employ 300 staff and are ranked as a Legal 500 Top Tier Firm.

TAG has been appointed by Forbes Solicitors to identify and acquire new premises for its Manchester office which is having to vacate its building in April 2024 following a decision by its new owner to comprehensively refurbish the property.

As part of our brief, we have had to assess the impact that increasing numbers of visiting clients and staff will have on the size and form of the office. This may result in greater demand for ad hoc meeting space and “hot desks”. Also, visiting clients and staff might benefit from having more generous kitchen and break out areas in which to interact. The availability of the on-site amenities such as bookable conference rooms and study cubicles might also prove vital to those working on a more agile basis.

The first building tours commenced in mid-October with a range of buildings being inspected. We are currently helping Forbes develop a final shortlist before detailed lease negotiations are entered into on the preferred choice.

We shall update this story in a few months’ time once the relocation is complete and the client has provided their feedback.

If you would like help with identifying a new office for your business whether it be in Manchester or elsewhere in the UK, please call Martyn Markland on 0161 457 1422 or email him at mm@tenantag.co.uk..

 

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