There has been a huge demand for logistics space over the past couple of years and demand is continuing to increase. As competition for space increases, it will be interesting to see what impact this has on post-lease dilapidations claims.

Dilapidations claims in warehouses can often be higher than in other sectors due in part to the size of the properties, but also because of the cost of removing specialist equipment that the former tenant might have installed.

A landlord's claim for damages for a former tenant's breach of its repairing obligations at the end of a lease is capped by the extent to which the value of the landlord's reversionary interest has been reduced as a result of that breach. The valuation will be assessed on expert evidence but it is possible that demand and competition for logistics space will increase to such a level that tenants are willing to take leases of properties in a poorer state of repair at market rent and with full repairing covenants. If that happens, it is difficult to see what a landlord's loss might be, because it will be getting market rent, and any dilapidations claim against the outgoing tenant could well reduce or fall away as a result. It will be interesting to see whether this does have an impact on dilapidations claims or whether incoming tenants will insist on some form of discount, or a more limited repairing obligation, due to the premises being in a poorer condition.