Our second webinar in our property owners post-COVID series focused on commercial property, taking into consideration the relationship between landlord and tenant, opportunities arising from lease events, the impact of non-performing loans and the value of strategic partnerships.

Claire Wilkinson, Partner, Womble Bond Dickinson chaired the discussion and was joined by Robert Stokely and Chris Horler, Directors, The Real Estate Investment Office (TREIO), Robert Newcombe, Chair, Newcombe Group and Will Fraser, Partner, Womble Bond Dickinson. The key points are summarised below, if you would like to watch the full recording please email: events@wbd-uk.com.

Landlord and tenant relationships

The value of a strong relationship between landlord and tenant has always been beneficial, but has been highlighted even more by the pandemic. We have seen large solvent tenants refusing to pay rent despite being able to, but small businesses who have been heavily impacted by the pandemic more willing to entertain discussions on rent concessions. Where there are existing strong relationships between landlord and tenant, there has been better negotiation to allow for temporary rent concessions and rent deferrals.

As lockdown restrictions lift and the world returns to a new normal there will be interesting developments between landlords and tenants. Firstly, tenant behaviour will be sought after as a key metric in determining whether to rent to them, however this is not easily quantifiable and gaining this information will fall to speaking to property management agencies in more detail for references. Secondly, the dynamics of the relationship may change depending on pressure from banks for income return as well occupiers' needs changing in the future.


Lease terms are continuously evolving, traditionally this is at a relatively slow pace however COVID has accelerated this evolution. In response to the pandemic the industry is noticing that retail landlords are seeing more turnover rents, rent reviews and shorter leases in order to appeal to tenants. This compares strongly with warehouse and logistic centres where there is more of a shortage in supply and as such leases are not evolving at such a great pace.

At the beginning of the pandemic many asset managers used lease renewals as a means to adapt to the pressure of low rent recovery and turnover was low. As leases come up for renewal, particularly for office space, there will be greater negotiations on flexibility of adapting that space and making it work to suit the tenant. The occupier will have greater power in terms of these negotiations than previously. To make it successful landlords will have to listen to occupiers even more and account for these problems.

Loans and investment

Over the past 12 months banks, loans and investments have been one of the sectors that have been affected the most. We have seen changes with fewer smaller loans being approved. Top changes include:

  • Out of 47 lenders who operate in the UK property markets only nine are active in the below £5million lending, with the other lenders focused on bigger ticket loans
  • Most banks are trying to retain money through loan extensions
  • Online tools from lenders which provides the ability to identify risks and opportunities in property and borrowing.

In terms of looking ahead it is still an uncertain market and it is difficult to predict the overall impact the pandemic will have. One of the key considerations will be the re-emergence of inflation, after recovering from the financial crisis the risk of increased inflation could affect many lenders strategies moving forward. More will be known about this in the next 12 months.

Key issues affecting the property market

  • Obsolescence – due to the changes to working and shopping partners there are risks that some buildings will become obsolete or require dramatic adaptation. Owners should look at assets and how they can be repurposed given more flexible working patterns for office workers and the move to online shopping in retail
  • ESG – there is an increasing focus on developments and existing properties being fully sustainable, this is something that property owners will have to take into consideration for future investments in order to bring on board tenants. In addition, lenders are increasing their focus on borrowers' strategies for achieving more enhanced and sustainable schemes.

This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.