For padel operators, securing the right property lease is a foundational step in scaling a business and ensuring long-term profitability. Sarah Cowen, a partner at Myerson Solicitors, outlines five essential strategies to help operators structure their leases to support growth and protect their investments.
Key Lease Considerations for Padel Operators
To avoid common pitfalls that can hinder expansion or lead to financial strain, operators should focus on the following five areas when negotiating their commercial property agreements:
- Choosing the right rent structure: New operators may find a traditional fixed rent difficult to manage during early development. A turnover-linked rent—where payments are tied to revenue—can reduce initial financial pressure, though it requires more complex reporting. A hybrid model, combining a base rent with a turnover percentage, offers a balance of security for the landlord and flexibility for the tenant. Established, multi-site operators, however, often prefer fixed rent for its predictability in budgeting.
- Future-proofing the permitted use: Padel venues often evolve to include retail, food, beverage, and event spaces. Operators must ensure their lease includes a broad permitted use clause from the start. If the clause is too narrow and limited only to "sports facility" use, the operator may be legally barred from adding these essential revenue-generating services without seeking costly landlord consent.
- Securing an appropriate lease term: Given the high upfront costs of building padel courts, operators need a long enough term to recoup their investment and establish a brand. A 15-year term is common in the industry. Furthermore, operators should seek security of tenure under the Landlord and Tenant Act 1954, which provides a statutory right to renew the lease. If a landlord refuses this, negotiating an explicit option to renew is a vital alternative.
- Negotiating break rights: Operators should be wary of landlord break rights, which could allow a property owner to terminate the lease before the operator has recovered their initial capital expenditure. Conversely, tenant break rights are highly beneficial, as they provide the flexibility to exit a lease early if the business needs to relocate to a larger facility or pivot its growth strategy.
- Retaining flexibility for alterations: As a business grows, the ability to add more courts or modify the facility is critical. Leases should be negotiated to allow for minor, non-structural alterations without requiring landlord consent. Clearly defining the distinction between prohibited, consent-required, and permitted alterations ensures that operators can adapt their space to meet market demand without unnecessary administrative delays.
