Exercising a break clause and showroom relocation to Farringdon Road

When taking up a new position as UK MD for German furniture company König + Neurath, Mark Baldwin wanted to be sure that everything was on a sound footing and knowing us from his previous company, asked us to review the lease for their London showroom.

What transpired was a larger project than anticipated, which ended up with K+N moving to a better located showroom and saving a substantial 6 figure sum.

Lease review

We were happy to review the lease and immediately spotted that the rent being paid was significantly higher than the prevailing market. Further detailed reading showed that there was a break clause in the lease that had to be exercised by the following week.

Although the client was happy with their premises, we needed to exercise the break to bring the landlord to the table for negotiation.

Breaking the lease

While exercising a break clause sounds simple, there are numerous hurdles that can make the break invalid, so we always recommend the break notice being issued formally by your solicitor.

In this case, processes were put in place very quickly and the break was duly exercised satisfactorily with our guidance.

Opening negotiations with the landlord

Having conducted many projects in the Clerkenwell area, we had comparable evidence of current rents to hand and presented these to the landlord.

Expecting a relatively simple process to agree a fair rent reduction, we were surprised at the landlord’s complete intransigence, leaving K+N with little option other than continuing to pay well over the odds or finding alternative premises.

Hunting for a new showroom

Searching for a new furniture showroom for K+N during the on / off lockdown situation caused by Covid-19 wasn’t the easiest, but we identified numerous options and arranged viewings of those most suitable.

An added complication was that travel restrictions prevented the senior management of this German company from visiting to inspect the proposed premises. We put a number of steps in place to overcome this, including making a video of the proposed building and the surrounding area, including other furniture related businesses.

Finalising the relocation

With outline terms in place and a final conversation with the existing landlord confirming that he was unwilling to accept a reduced rent, we helped our client to deal with their dilapidations liability and saw the deal on the new premises through to completion.

Outcome

Overpaying on property means a business having to work a lot harder to make the same profit, so with our help, the client was able to begin his tenure with a better located showroom on fair rental terms and with lease provisions to protect his employer’s interests in the long term.

April 2021