5 Things to Consider When Purchasing Commercial Property
Purchasing new commercial property is an exciting investment and a significant milestone for many organisations that can propel them to success.
Purchasing new commercial property is an exciting investment and a significant milestone for many organisations that can propel them to success.
As you look to grow your business, you may look into expanding your property portfolio. Purchasing new commercial property is an exciting investment, and a significant milestone for many organisations that can propel them to success.
Like many major investments, purchasing new property comes with risk, particularly for smaller businesses. It is very important to understand the threats that come with expanding into new commercial property, and to do your research before taking the leap.
With commercial property, there is no set template to follow. Each business has their own identity, facing different challenges with unique ambitions. In this article, we will shine a light on some of the complexities of the commercial property landscape, giving you a better idea of how you can expand your business.
Perhaps the hardest decision to make is whether you wish to lease, or purchase commercial property. It is important to ensure that your decision is an informed one, justified by things such as your financial situation, business type, and whether you’re looking for a long or short term investment. Some businesses may prefer to own a property, whereas others may be drawn to the option of paying a landlord.
There are plenty of different pros and cons when choosing to lease or purchase, which we explore below:
Leasing a Property
When you lease a property, you pay rent to a landlord (lessor) for a set period of time in order for you to use a property, as opposed to owning it. With this option, you benefit from lower structural maintenance costs that your business is not liable for, as well as the flexibility to relocate at the end of your lease agreement.
On the other hand, leasing can create problems in the sense that it may actually be a more expensive monthly cost than paying back on a mortgage. Another disadvantage would be that you are liable to pay for the rent until the end of the lease expiration even if you decide to vacate the property.
Owning a Property
Sometimes, businesses need to purchase a building depending on their aims, and use of the building. Purchasing property gives you full ownership, and more control over how you modify the space to your requirements. Eventually, if you decide to vacate your premises, you will be able to sell the property, or rent it out to tenants to generate further income.
However, owners must keep in mind that an initial payment will have to be placed on the property, and that a large sum of assets will be tied to the property. On top of these costs, you will be responsible for the maintenance costs, and any damages to the property.
Commercial property is a diverse market with different property types for all kinds of organisations. Not only will you have to decide which type of property is best suited to you, but you will also have to choose the right location for you.
Firstly, you must look to your demographic to discover where your customers are based, and where they are most likely to interact with your business. An area with new developments will also capture the attention of more people, which would be perfect for a long-term investment into a property.
It will be worthwhile completing a competitor analysis in the area that you are seeking to move into, as positioning your business next to a similar business may hinder your success. Likewise, basing your business nearby other businesses that you can benefit from may even spark partnership.
Tackling commercial property alone is no easy task, hiring a solicitor can help to speed up the process, ensuring transparency throughout from start to finish. A good solicitor will be able to break down the complicated legal jargon for you, working to provide your business with the best outcome.
All businesses’ wants and needs are different, that’s why our expert team at Freers Askew Bunting takes the time to understand your organisation. Our tailored service means that our team has extensive experience dealing with an abundance of complex challenges, across all sectors.
Learn more about how we can help you, click here.
Building regulations are legal requirements that you must follow when operating inside of a commercial building. Even if you purchase commercial property, as opposed to leasing, there will be regulations that you must comply with, such as construction, and altering structure particularly without planning permission from the local authority.
As a business, you must be aware of zoning laws, and permitted uses, as this may impact your ability to carry out your operations in the property. Hiring a solicitor is an excellent way of ensuring that your business fits into any regulations, working with you to find the perfect property for the highest chance of success.
It is also important to take into account the current economic conditions in both the local, and national economy. The same way that house prices can rise, so can commercial buildings, and the current state of the market may impact your decision, or affect your costs.
Researching the local commercial market is an excellent way of understanding where you can choose your location. In an area where there is a low supply of commercial property, you may struggle to find a suitable space at a reasonable price.
The most critical thing to remember when purchasing commercial property, is that you have a clear budget, with each of your finances and assets mapped out clearly. Commercial property is expensive, and mismanaging your finances can result in a collection of debt, or even the collapse of your organisation.
While commercial property may seem daunting, and very complicated, working alongside a solicitor can ease your worries with a swift process. With hundreds of positive reviews, emphasising our dedication to client satisfaction, Freers Askew Bunting is a trusted name. For further information, visit our Commercial Property page.
Looking to get started? Contact Andrew, or a member of the Commercial Property team to discuss your vision.
Email: Enquiries@freersaskewbunting.com Call: 01429 743300
