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UK logistics and transport has faced its fair share of challenges in the past few years. If the Brexit minefield wasn’t enough to contend with, the emergence of COVID in 2020 disrupted supply chains worldwide.
Reports of stockpiling began to emerge as far back as 2016 following the Brexit vote, with concerns over disruptions to ‘just-in-time’ supply chains in the UK.
Meanwhile, COVID has seen a significant shift in retail demand, with restrictions seeing shoppers driven online, placing unprecedented pressure on supply infrastructures.
What each issue has highlighted is the sparsity of appropriate warehousing and distribution space in the UK, with 2020 marking the sector’s highest-ever recorded take up in space. The signs are that this is set to continue.
However, businesses in the sector are having to find practical solutions to their problems with site-sharing being one of those solutions.
Though not a new concept, businesses should consider the legal implications of site-sharing before entering into new arrangements. For example, where a site is occupied under a lease, it is essential the parties pay careful attention to the ‘alienation’ provisions within the lease document itself.
Common convention within commercial leases is that site sharing may be allowed between group companies, but not with unconnected third parties.
Likewise, underletting (or sub-letting) the whole of a site may be permitted, but not underletting of part only. Parties may require more generous provisions here, particular where it is beneficial for third party service providers to maintain an enduring presence within the same space.
While more prohibitive terms are likely to be the starting point in most commercial leases, alienation provisions should reflect the way the transport and logistics industry works in practice, even if that means fighting for more generous terms with a prospective landlord.
Very careful consideration therefore needs to be given at the point the lease is being negotiated to ensure the document meets the needs of the tenant.
Where businesses are looking at site acquisitions or leases in the logistics, storage and distribution market, Ansons Solicitors
Commercial Property team have the knowledge to advise and guide their clients through uncertain times. Please contact Matthew Easter, Associate Solicitor in the Commercial Property team, on 0121 716 3693 or at email@example.com.
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