Vickery Holman are currently instructed to negotiate a number of veterinary surgery rent reviews. With many once small veterinary practices now becoming part of national veterinary groups, landlords may find that they are dealing with a much larger organisation than they were before.
The principles of dealing with rent reviews and lease renewals of veterinary practises remain largely similar to that of standard commercial property. However, knowledge of specific factors that make up the rental value of vet premises is essential to negotiating the best deal. Here are a few differences between veterinary property and standard commercial units:
Lease length
Usually, lease length agreed in the majority of transactions is longer than for offices. A 15 year term with no break options is common. This is very different from modern office transactions, where 3-5 years is the norm. In rent reviews where a lease term forms part of the assumptions, there must be consideration of whether differing lease terms in comparable properties effect the market rent for the subject property.
Fit out
Equipment and fit out of veterinary practices varies, from simple office and reception areas to more complex surgeries and x-ray rooms. These additions are likely to add rental value to the property. In every case, consideration of whether this increased value can be attributed to either tenant’s improvements or features within the building is needed to appropriately assess the market rent.
Parties involved and impartiality
Veterinary practices are often owned by one or several directors of the business. Situations occur where either the director/s retire but remain the landlords, or the business is sold to a larger organisation who runs the practice, often with the landlords continuing to work for the new company. In these situations, it is easy to have difficulty discussing and negotiating rent reviews as the parties are relatively connected. For a landlord in this situation, instructing a surveyor with experience in dealing with veterinary rent reviews is a good idea. They can analyse the market evidence and give an honest professional opinion of the market rent and/or lease terms that should be agreed. They can then negotiate the new terms on the landlord’s behalf and manage the process until completion of a new lease or signature of rent memoranda.
Our expertise
We have dealt with rent reviews of practices ranging from 1,000 sq ft to over 8,000 sq ft from Gloucestershire down into Cornwall and have experienced surveyors who know the veterinary market well. We are always pleased to speak to any veterinary landlords or managers who would require a market rent valuation or would like to discuss an upcoming or retrospective rent review.
