Last week saw an interesting decision from the court on post pandemic retail rents in Central London. A tenant occupying under a 54 Act protected lease has seen its rent cut from £220,000 per year to just £102,000.
A long running dispute over rent had occurred partly due to the lack of available comparables and the court did acknowledge the difficulties faced by rent review experts in dealing with a COVID-dominated rent assessment without available comparables. The decision however, provides an interesting example of the court's approach to the effect of the pandemic on valuation. The traditional zoning methodology was used rather than assuming a percentage reduction in rental valuations attributable to COVID-19.
Should landlords be concerned? I doubt many will be quaking in their boots but the case certainly emphasises the market shift in a tenant's favour. With many retailers now looking towards a turnover model, it may be that even for protected leases landlords will need to consider a different approach in order to maximise income.
A judge has ruled that annual rent for a retail unit in Central London should be less than half of what it was in 2011, setting a commercial precedent that could have a significant impact on rents in the prime West End retail market.