Commercial Property

Commercial Property: Advice and Best Practice

Commercial property can be viewed in much the same way as residential property when it comes to choosing whether to buy or rent. In buying commercial property a business owner builds equity in the property instead of handing their money over to a landlord – and that equity is enhanced should the premises rise in value. Furthermore, as the owner of your commercial property, you have control – from how to arrange the interior space to whether or not to lease any unused part of the building to tenants. And you are no longer at the mercy of the market when it comes to rent increases.

Buying commercial property is a serious commitment, however, that requires a lot of money so it’s not a decision to be taken lightly (nor is renting commercial property something that one should enter into without thinking long and hard). The first step should be to consult a Chartered Surveyor or commercial property agent who can provide expert knowledge and experience. It also requires a keen eye where the legalities are concerned, so it’s imperative that a solicitor experienced in commercial property is instructed. There are a host of commercial property solicitors in central London and all around the country.

There’s a wide range of lenders willing to offer commercial property mortgages, although most require buyers to pay a deposit of a small part of the purchase price. This could affect cash flow and profitability of the business for a while but it does mean you are investing in a long-term asset that one day you or your business will own outright. However, if you need greater control of your cash flow and are not confident that you can successfully ride out any future storm in the economy that might affect your business, then renting is the better, and safer, option.

Whether you are buying or renting, you will need to consider a number of factors when looking for a commercial property for your business. For starters, what sort of property do you need? Look at businesses similar to yours and see what types of premises are being used. Also, ask yourself whether you need to be near customers, suppliers, or employees. Do you need to be near transport facilities? Is passing footfall essential to your business’s success or will customers go out of their way to get to you? What can you afford? There are various ways to find commercial property; you can take on the task yourself or instruct a commercial agent or Chartered Surveyor to do it for you. If you decide to look for a property yourself, look for signs outside empty buildings or ads in the newspapers, or on the Internet.

Once you’ve found a property, if you’re renting the premises, as well as instructing a solicitor to advise you on the lease, a Cchartered Ssurveyor or commercial property agent will also be able to advise you on the best sort of deal to suit your business needs. Remember that while you may have to pay for the expert advice you receive, it could save you a lot in the long run. Mistakes concerning commercial property can lead to business failure and bankruptcy.

When it comes to your commitments, anyone renting commercial property will have to consider exactly what they do and don’t want to tie themselves into. Find out by how much the rent could rise; the length of the lease and how long you want to commit yourself to renting the property; whether there is the opportunity to “break” the lease (or transfer it to someone else) should you get into financial difficulties or need to move on; whether you’ll have the right to exte nd the lease at its expiration; and what your obligations are in respect of insurance, service charges, and repairs. There are quite a number of issues a commercial property tenant has to consider which is why businesses choose to purchase commercial property if they can afford it.

It’s not just business traders wanting to own their own premises who are interested in buying commercial property however; it can also prove a very wise move for an investor, especially in central London, the world’s leading commercial centre, which continues to expand with new businesses and development – not to mention being the host city of the 2012 Olympics. There are advantages to the investor in buying commercial property as opposed to residential property: unlike tenants of residential properties, commercial property tenants typically sign leases for longer tenancy periods; tenants of commercial properties are usually liable for repairs to the property; and commercial property return tends to be more closely linked to income and not so dependent on the increase in house prices as is the case with residential property investment.

Private investors who buy commercial properties at auctions should have arranged funding before bidding (this funding can be cancelled if you’re unsuccessful). In addition, if your bid on a property is successful, you have a limited time in which to make payment, and some lenders have difficulty in meeting this schedule if they are given late notice. Most commercial properties sold to private investors come with leases agreed with tenants generating a predictable source of income. However, it would be prudent to check how solid the tenant is and how their business will be affected by any changes in the economy.

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