C&W’s Specialist dilapidations team saved an industrial occupier 71% against a dilapidations claim of £7 million

The Challenge

The 170,000 sq ft 1940 industrial unit was in a very poor state of repair and combined with specific obligations under the lease term, the sub-tenant faced a dilapidations claim from the landlord in excess of £7 million.

The Solution

Our client, the sub-tenant was served with a £7m dilapidations claim by the immediate tenant, who still had 6 years unexpired on their own lease. We assessed the site to be a development opportunity,
We ran two options consecutively.

Option 1 : Broker a deal between freeholder and immediate tenant enabling the latter to surrender the lease and so release our client, the sub-tenant, from their full dilapidations liability.

Option 2 : Defend the dilapidations claim rigorously using our extensive experience in dilapidations strategy and knowledge of the market.

The Results

Cushman & Wakefield were able to use our commercial awareness to think outside the box and bypass the immediate landlord and approach the freeholder directly to broker a common sense deal, where all parties concerned were happy with the result, and avoided court action.

The freeholder accepted a surrender from the immediate tenant. We negotiated a contribution from our client, the sub-tenant, towards the dilapidations liability of £2 million. The result was a saving of £5 million or 71%.