Christie + Co appeals for realistic rent reviews

16 December 2005

Christie + Co has stressed the importance of ensuring that rent reviews in the children’s day nursery sector are thoroughly researched, draw on relevant data, and reflect individual business potential.

“Compared with many other types of businesses, the children’s day nursery sector is still in its infancy,” explains Christie + Co Director and Chartered Surveyor Nick Broadbent. “Rent review methodology is evolving and there is often limited local evidence available. It’s important for anyone who’s undertaking a rent review to ensure that they have a thorough understanding of how day nursery businesses operate. For the tenant it is particularly important that the rent reflects the business potential.”

According to Mr Broadbent, most landlords approach the review from a purely property perspective. “Many landlords will choose to judge a property purely on its size – the floor area it provides – without considering how the performance of the business is reflected.”

As most towns only have a handful of nurseries, comparisons are often made with properties that are not remotely comparable. “I have handled reviews where comparables from different parts of the country have been quoted to me”, says Mr Broadbent. “It is essential in these instances that not only the difference in property values is reflected, but also the respective business performance.”

According to Mr Broadbent, nursery businesses should be considered individually. “There are many factors to consider besides just the property value,” he explains. “These include operational strengths and weaknesses such as occupancy levels, average fees, costs and the effective yield per registration. These are all factors that can differ very significantly between locations, and between one nursery and another. An excessive rent could be the difference between profit and loss.”

Over the next couple of years, landlords will be looking for rental growth on properties acquired during the peak of the corporate acquisition period. With limited new letting evidence available, tenants need to be properly advised to ensure that reviews produce reasonable and affordable rents.

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For further information on this press release, please contact: Lorna Byrne at Christie + Co. Tel: 020 7227 0797 or 07734 856836. lorna.byrne@christie.com