Rent Negotiation Case Study - Direct Wines

Challenge

Vail Williams was instructed by international independent wine merchant, Direct Wines, to provide property lease advice in relation to a proposed 41.5% increase in annual rent by their landlord.

Direct Wines disputed the proposed increase which would seriously affect the company’s business overheads. The building represented one the client’s main distribution warehouses, so it was essential to keep the rent as low as possible.

An expert team of property lease advisers was appointed to negotiate the rent review on Direct Wines’ behalf with the aim of achieving the lowest possible valuation on the rent.

However, the negotiation of the rent was not a straightforward process and the landlord fought their position fiercely.

How we helped

Following an in-depth review of the situation, established that rent was not being assessed on correct floor area.

This adversely affected the rent review.

Landlord was including a mezzanine which the tenant had installed at their own cost.

Due to a lack of activity in the market, there were few market transactions against which to compare the rent.

We overcame this by looking at a wider geographical area, making use of extensive knowledge of the regional market and asset type.

Results

As a result of the advice given and negotiations undertaken by the property lease team, the final rent increase was reduced by nearly 40% to 2.4%

We saved the client over £1.83 million over the remaining 5 years of the lease.