January 2011: Gilbert Evans Professional Team Chalks Up Another Victory Against the Analysis of 100% Rack Rents
Gilbert Evans was instructed by Next to undertake a rent review and by Superdrug to negotiate a lease renewal for stores in the Southside Shopping Centre, Wandsworth.
The historic Zone A tone in Southside, from 2006 up to early 2009 was £125.00 psf. Gilbert Evans was able to challenge, and subsequently defeat, the landlord’s argument that rental levels should be maintained by proving historic levels to be unsustainable.
With reference to the analysis of 80% Base Rent, as opposed to the 100% Rack Rent, Gilbert Evans were able to settle the Next rent review and established a substantially reduced Zone A level of £99.60 psf, effective from September 2009. The interim rent and new lease negotiations for Superdrug culminated in agreement on Zone A £83.78 psf, effective from February 2010 and September 2010 respectively, also valued with reference to the analysis of 80% Base Rents, as opposed to the 100% Rack Rents .
In terms of market decline the above demonstrates a 33% fall in the 12 month period from February 2009 to February 2010, broken down as follows:
A 20% fall in the 7 month period from February to September 2009.
A 13% fall in the 4.5 month period from September 2009 to February 2010.
A plateau in values in the 7/8 month period from February to September 2010
Through the force of its argument, Gilbert Evans was able to achieve substantial rental savings for both clients, including the payment of all of their professional fees in respect of the rent review for Next.