Epping Property

Industrial Property Specialists

Vital factors to consider when entering into a new Lease

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It is essential to consider all the factors when entering into a new lease agreement for industrial property. Once the lease contract has been signed, changing or re-negotiating is challenging.

The following aspects of a property lease transaction are fundamental:

  • ·         Exactly what is being rented? (e.g. Factory/ Warehouse, offices, yard areas, etc.)
  • ·        Are there any areas utilised by other users? (e.g. Shared yard areas).
  • ·         Rentable area of premises. (The most commonly used formula is the SAPOA Method of Measuring Floor Areas.)
  • ·         Exact use of the premises and facilities.
  • ·         Date of Occupation of the property.
  • ·         Lease start date.
  • ·         The period of Lease.
  • ·         Lease End Date.
  • ·         Annual rental escalation.
  • ·         Deposit required. (Deposits are non-vatable).
  • ·         Renewal period (Terms & dates to be agreed upon to be Valid.)
  • ·         Initial Rental. (Excl. Vat)
  • ·         Other costs to be paid by the Tenant? (e.g. Security, Operating Costs).
  • ·         How/ when do these costs escalate?.
  • ·         Consumption charges and how and when are these billed (e.g. Electricity, Water, Sewerage etc.)

Additional important items:

  • ·         Obtain Suretyships (if applicable).
  • ·         Any special/other requirements requested by the Tenant?
  • ·         Confirm the tenant’s legal entity to prepare all FICA documentation required by Landlord.
  • ·         Tenant to permit to consent to a credit check by the agent or the landlord.
  • ·         Acquire Resolutions where companies or trusts are legal entities.
  • ·         What are the Lease/ Administration costs charged for drawing up the contract?

Practical aspects:

  • ·         Power requirements?
  • ·         Height/ stacking and racking requirements.
  • ·         Fire regulation compliance (e.g., Sprinkler systems, etc.).
  • ·         Insurances.
  • ·         Loading, parking, paving, and turning circle requirements.
  • ·         Flooring and lighting.
  • ·         Staff facilities.
  • ·         The timing of a move from previous premises.
  • ·         Finally, cleaning up of former facilities.

If you have any questions or are unsure of any aspect of a transaction, please contact Epping Property for a confidential discussion. It pays to use an experienced industrial property broker to negotiate the best deal possible and to clarify aspects before a lease is signed. There are too many instances where parties, years later, try to decipher what intentions were when a rental agreement was signed.

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Factors to Consider when entering into a new lease
Factors to Consider when Entering into a new lease for industrial premises

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For further information and detail, please contact Epping Property.

+27 (0)21-531-0026

www.eppingproperty.co.za

Factors to consider when entering into a new lease

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