RETAIL REAL ESTATE RENT ADJUSTMENT

 

Promise

Do you think you are paying too much rent compared to other stores in your neighbourhood? If so, now there is an easy way to find out.  Kr@mps Bog will determine how your rent level compares and will assist you in obtaining a rent reduction if you are paying over the norm. 

 

Problem

When you rent a retail business location, as defined under Article 7:290 of the Civil Code, you typically are asked to sign a five-year lease, with an option for another five years. After the expiration of the first five years, the lease is automatically renewed for another five years; thereafter renewals are for undetermined periods. After the completion of the first five years, you can, at any time, request a rent adjustment. This requires research into the rents paid by comparable properties in your neighborhood. Kr@mps Bog will carry out this research on your behalf.

 

Solution

If it turns out that you are paying more than comparable properties, you and Kr@mps Bog can then enter into a discussion with the owner of the property with the aim to effect a rent reduction. If such discussions are not fruitful, the difference of opinion can then be brought before a local court. This procedure is regulated under Article 7:303 of the Civil Code. The research carried out by Kr@mps Bog will be an important expert witness exhibit placed before the court. The judgment of the local court on the appropriate rent level will be binding on the property owner. Only in rare cases does the owner appeal to a higher court.

 

Experience

The service provided by Kr@mps Bog can also be obtained through the Rent Advisory Commission of the Chamber of Commerce. This may take longer and will in any case not be less costly. Previously, the Kr@mps Bog expert has prepared some 125 advisory reports for the Commission, covering all types of situations and locations. His expertise is now directly available to Amsterdam retailers.

 

Example

As retailer, you have rented a central city location of 100 m2 at a rate of €400 per m². After five years the rent, through indexing, is increased to €434 per m². You suspect that you are paying above the norm and engage Kr@mps Bog. The Kr@mps Bog research report shows that the average rent in your neighbourhood is €331 per m². Discussions with the owner lead to an agreement to pay €360 per m² for the next five years, resulting in an annual saving of €7.400, and a lower starting point five years hence. 

 

Costs

To engage Kr@mps Bog you enter into a simple service contract. The initial payment is from €5.000 (excluding costs and VAT). At this point, you, as retailer, can decide to proceed or not. If you decide to proceed, then after the discussions with the owner, you pay Kr@mps Bog a  percentage of the result of the negotiation, with a minimum of €1.000, excluding VAT.

 

Before signing a five-year renewal lease, consider contacting Jan Kramps for Retail Real Estate Rent Adjustment. You’ll be glad you did.