Property Consulting Case Studies - BNP Paribas Real Estate UK
Royal MailHelping Royal Mail reduce their rental outcome by £3m over the review period. Rent review on a 220,000 sq ft warehouse for Royal Mail, generating savings of £3m over the review period.
- Location Greenford, West London
- Key figures 220,000sq ft, rent £2m p/a
- Contact Richard Stevens, +44 (0)20 7484 8139
- Royal Mail made a significant saving of £603k per annum and £3m in total over the review period.
- Royal Mail retained their reputation in the market as a tough occupier who will challenge rent reviews.
- Following the rent review they were able to regear their lease, obtaining a large rent free incentive.
- As a corporate occupier, Royal Mail must monitor the total rent roll of their portfolio and ensure costs are minimised. As most rent reviews are upwards only Royal Mail needed to ensure that the increase was marginal in order to minimise their rental outgoings.
What we did
- The landlord and the tenant were unable to reach an agreement on revised rental values and the landlord would not move from their best offer.
- Certain relevant evidence could not be confirmed due to confidentiality agreements. Because of our detailed understanding of the Arbitration Act, we were able to get permission from the Arbitrator to go to court and obtain a Witness Summons. This allowed the evidence to be presented to the Arbitrator.
- As a result of the case presented, the Arbitrator made a decision close to our proposed rental value, and some £300,000 per annum below the landlord's best offer. This saved Royal Mail £3m over the five year rental period.
- Following this rent review we also regeared the lease. Royal Mail signed up to a longer lease and benefited from a share in the enhanced value of the investment, via a lengthy rent free period.