What Is An Industrial Lease?

An industrial lease is a legal agreement between a landlord (lessor) and a tenant (lessee) that grants the tenant exclusive possession of an industrial property for a set period in exchange for rent. Industrial properties can encompass a wide range of buildings, from warehouses and factories to workshops and distribution centres.

Here at Blackstone Solicitors, we have a wealth of experience in advising both landlords and tenants on all aspects of industrial leases.In this article, What Is An Industrial Lease, we take a look at the process and mechanism involved.

Free Initial Telephone Discussion

For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of industrial leases, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.

What Does an Industrial Lease Typically Cover?

A well-drafted industrial lease will comprehensively address the rights and responsibilities of both the landlord and tenant. Here are some of the key areas typically covered:

• Rent: The lease will specify the amount of rent payable, the frequency of payments (e.g., monthly, quarterly) and the method of payment. There may also be provisions for rent reviews at pre-determined points during the lease term.
• Term: Industrial leases tend to be longer than commercial leases for shops or offices, often ranging from 5 to 20 years. The specific term will depend on the negotiation between the parties and the nature of the property.
• Permitted Use: The lease will clearly define the types of activities the tenant is permitted to carry out on the premises. This is important to ensure the tenant’s business operations are compatible with the property and the surrounding area.
• Repair and Maintenance: The lease will allocate responsibility for repairs and maintenance of the property. Common types of clauses include:
  • Full Repairing and Insuring Lease (FRI): The tenant is responsible for all repairs and maintenance of the entire property, both internal and external, as well as insuring the building.
  • Internal Repairing and Insuring Lease (IRI): The tenant is responsible for repairs and maintenance of the interior of the property, including windows and doors, but the landlord takes care of the exterior.
  • Building Service Charge: The tenant pays a service charge to the landlord to cover the cost of maintaining common areas of an industrial estate.
• Tenant’s Alterations: The lease will typically require the tenant to obtain the landlord’s consent before making any alterations to the property. The lease may also specify that the tenant must return the property to its original condition at the end of the lease term.
• Assignment and Subletting: The lease will state whether the tenant is permitted to assign the lease (transfer the entire leasehold interest) or sublet the property (rent all or part of it to another party).
• Break Clauses: These clauses allow either the landlord or tenant to terminate the lease early under certain pre-agreed circumstances.
• Dispute Resolution: The lease will outline the process for resolving any disagreements that may arise between the landlord and tenant.

Key Considerations for Tenants

Taking on an industrial lease is a significant decision for any business. Here are some important factors for tenants to consider:

• Suitability of the Property: Ensure the property meets your specific business needs in terms of size, location, access, and any required features (e.g., loading bays, power supply).
• Term of the Lease: Consider the length of the lease term in relation to your business plans. A longer lease may offer greater security but can also limit flexibility.
• Repair obligations: Understand the extent of your repair obligations under the lease, particularly under a FRI lease, as these can be significant costs.
• Permitted Use: Ensure the permitted use clause allows for all your planned activities on the premises.
• Break Clause: If a break clause is important for your business, negotiate its inclusion in the lease at the outset.

Key Considerations for Landlords

As a landlord, you will also want to consider the following:

• Tenant Suitability: Carefully assess the tenant’s business and ensure their operations are compatible with the property and the surrounding area.
• Lease Term: A longer lease term provides a secure income stream, but shorter leases can offer greater flexibility to find new tenants in a changing market.
• Rent Reviews: Include provisions for rent reviews at pre-determined intervals to ensure your rental income keeps pace with market trends.
• Repair Obligations: Clearly define the extent of the tenant’s repair obligations to avoid any disputes in the future.
• Permitted Use: Restrict the permitted use to activities that are compatible with the property and the surrounding area.
• Security of Possession: Consider requiring a rent deposit or guarantor to protect your income in case of tenant default.

How we can help

We have a proven track record of helping clients deal with industrial leases. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.

How to Contact Our Commercial Property Solicitors

It is important for you to be well informed about the issues and possible implications of dealing with an industrial lease. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.

To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Blog, News Tagged as

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