Pub rent as a percentage of projected turnover reached its highest level for almost two years in the last quarter of 2014, but saw a slight drop overall compared to 2013, according to the Royal Institute of Chartered Surveyors Pub Benchmarking Survey.
The study shows that in the last quarter (Q4) of 2014, the average rent on a new lease was 8.4% of projected turn-over — its highest since Q1 of 2013 — but the average year-on-year figure fell from 8.3% to 7.9% compared to 2013.
This is accounted for by a slight increase in average rent (from £24,889 to £25,829) and a hike in average projected turnover for the next two years from £299,636 to £325,837.
While, on average, the wet share of projected turnover on new leases remained much the same in 2014 and 2013 at about 75%, it reached its lowest point for at least two years last quarter at 70%. Average dry share hit 25% for the same quarter, the highest since Q2 of 2013.
An increasing number of leases were fully tied in 2014 (52%) compared to the previous year (48.5%), with these leases making up a record 60% of total new leases offered in Q4 of 2014. Only 35% of leases were partially tied during this period.
Nationally, the average lease length in 2014 was seven years, but there is regional discrepancy with an average length of 11 years in London. Rent in the capital also reached £38,704 last quarter — 44% more than the national average during that time, and accounting for 11.1% of projected turnover for new leased pubs, the highest level for two years.
The figures were completed by Enterprise Inns, Punch Taverns, Marston’s and Star Pubs & Bars, and are based on 1,000 new leases in 2014 and 1,134 new leases in 2013. It includes letting transactions and lease renewals but not rent reviews and is taken from the business plans and accounts of willing lessees.