The Court has handed down judgment on the terms of the new lease, in the case of S Franses Ltd v The Cavendish Hotel (London) Ltd. This includes the rent payable which was assessed at £102,000 pa, less then half of what was being paid prior to lease expiry in 2016 - £220,000 pa.
The valuation was approached using the traditional zoning method rather then applying a percentage reduction to allow for Covid.
This decision gives an indicated of how the Court will approach rental valuation in a challenging market. It also shows a significant drop in West End retail valuations. A further sign that retail tenants are in a strong negotiating position in a market where landlords are looking to avoid empty property.
A judge has ruled that annual rent for a retail unit in Central London should be less than half of what it was in 2011, setting a commercial precedent that could have a significant impact on rents in the prime West End retail market.