Begbies Traynor calls on landlords to be more flexible

MORE properties will be left vacant unless landlords take a more flexible and pragmatic approach.

That’s the view of John Kelly, regional managing partner in the Birmingham office of corporate restructuring specialist Begbies Traynor, who argues hard-pressed companies, stuck in office deals they can’t get out of, are going to the wall unnecessarily.

He said: “Changing market conditions mean firms, particularly professional firms, sometimes need to move.

“In the good times, looking to impress potential clients, they have taken on plush offices in prominent locations but now find they are struggling to service their overheads and the place is simply too big for them.”

Kelly cautioned that the legal sector is particularly vulnerable with the arrival of the so-called ‘Tesco Law’ – de-regulation which will allow the likes of supermarkets, venture capitalists and insurance groups to start providing services once the preserve of solicitors.

“One way or another de-regulation will affect all sectors from the Magic Circle downwards and all need to respond. The powerful, the niche and the specialist are in a good position to survive, but pundits reckon many ‘ordinary’ law firms are likely to be forced out,” Kelly said.

“This is why we are already seeing so many mergers and restructurings in the sector.

“But they need to act fast and if, for example, they are constrained in any way, maybe by a costly office they can no longer afford, then they are in great danger of collapse.”

Kelly said landlords typically demand ten to 15 year leases from professional firms, whereas five to ten year leases with a break clause in the middle might be more sensible.