The Law Society Gazette quotes Cara Imbrailo on trends in commercial property
Commercial property has "been in flux post-pandemic", according to a feature published by The Law Society Gazette. The piece notes that "while return-to-work mandates have increased demand for office premises, a two-tier market has emerged, with buildings in core locations offering occupants on-site amenities and with higher green credentials attracting the most interest."
It goes onto suggest that recent figures published by Savills show that since 2020, rental growth rates for prime and secondary properties in central London, which once followed a similar trajectory, have diverged significantly. While prime rents have grown 11.8%, secondary rents are up just 4.8%. The same report found that leasing activity in central London was up by 18% on the same quarter in 2024, amid ‘robust levels of demand’. Demand in core locations has kept vacancy rates low. The drive to build more energy-efficient buildings does not only reflect tenant demand. There is growing sector pressure to meet net zero targets, which is filling the gap left by legislation.
The piece then analyses other issues within commercial property, across areas like rent review reform, green leases, the Building Safety Regulator (BSR) and a view of the future health of the market.
Commenting in the feature, Cara Imbrailo, Partner in our Real Estate team, explains that the ‘flight to quality’ has led to different types of leasing structures being offered by landlords:
There are more options on the table, and our landlord clients, who would traditionally only have operated in one way, are now having open conversations with tenants about making the space suitable for their needs. Whether that’s a 10-year lease with a break at five, shorter-term leases, “plug and play”, which spares the tenant some of the cost and time involved in fitting it out themselves, or the tenants wanting fully managed spaces.
Cara also comments on green leases, explaining:
Pre-pandemic, we only encountered green lease clauses occasionally, but five years from Covid, they are now market standard, and not particularly contested during negotiations. As well as data-sharing obligations, which are pretty much in all leases now, we are also seeing restrictions being placed on tenants carrying out alterations that could damage or worsen the environmental performance of the building. We are also increasingly seeing obligations on tenants to use energy from renewable sources, where possible and where it’s cost-effective.
The article also touches on the government's recent introduction of a new fast-track route for new-build HRBs, along with a leadership change and extra funding to recruit more staff - but some commentators note that problems remain with the gateway process, and gateway 2 in particular. Cara continues:
It is a major barrier to development, especially in London. The new chair, Andy Roe, is making positive noises to take steps to help, but it’s not making any material impact as yet. The gateway process remains a major challenge for new HRBs under development.
Read the full article in the Law Society Gazette here.
