If you’ve been working hard to grow your business, and you’re now at a point where you can move it into a commercial space, then I’m sure you’re feeling very proud of how far you’ve come. I bet you didn’t see this coming for a long time when you were drafting your first business plan in the back of an old notebook! Like any major act in business, acquiring your premises is wrought with challenges, dilemmas and tough decisions. If you’re feeling overwhelmed by the whole prospect, here’s a handy guide to acquiring your commercial property.
When you’ve done the maths and decided that you’re ready to move your business into a premises, the first thing you have to decide on is whether you’re going to buy or lease the office. In an ideal world, you’d buy it outright, and enjoy all the freedom that comes with owning commercial property. It’s true that there are a lot of advantages to buying a business premises outright. However, you also have to be aware of the potential risks that come with this course of action. The last thing you want is to purchase an office space, and then have the decision immediately turn around and bite you.
One of the major risks in buying is that location can be a double-edged sword. What might be the most sought-after commercial area in town right now could be a completely forgettable area tomorrow. The curve of gentrification can be delayed. The whole market can go bust. Yes, this can work the other way as well. Still, you need to be aware that location is not a constant. You also need to be aware of the potential loss of liquidity. When buying real estate, it’s pretty common for a lot of business owners to tie up a lot of their liquidity in the property. Remember that it’s not always easy to sell a piece of commercial property, particularly when the country’s in an economic trough. Having said that, if you own the property you’ll always have at least something to sell if it comes to it. Furthermore, if you were planning to rent out areas of the building to other commercial tenants, you have to be aware that this kind of cash flow can be very tenuous. Tenants can stop paying their rent all of a sudden, and you can run into surprise repairs that cost an arm and a leg. Before pursuing any property or signing any contracts, it’s extremely important to do your homework on the risks involved.
Now that you’re aware of some of the risks you may be facing, your next step should be assembling a few different experts to see you through the process of acquiring commercial property. As a business owner, I’m sure you’re used to throwing yourself into topics you know very little about. However, commercial property is far too big and complex for you to manage the whole situation yourself. Getting a team of experts together will help you figure out the best time to buy or sell, the best locations to target, and explain various technicalities of closing a deal. You’re going to need a good accountant in your camp. They’ll help to figure out the kind of deals your business can afford, and will analyse the tax budget benefits inherent in different properties. To ensure you’re getting the best service, I’d go to a specialised firm like Hazlewoods property accountants. A decent lawyer is more or less essential in the process of acquiring commercial property, too. They’ll deal with the land registry, draft sale or purchase contracts, and manage the transfer of funds between two parties. Again, you should choose a legal firm that’s established in property, like Bannister Preston, commercial conveyancing solicitors. Finally, you should look for a good commercial and mortgage broker. These professionals will help you identify the most cost-effective properties you could potentially acquire, and pick out the best financing solution available to you. You’re going to need a lot of well-founded advice before all of this is over, so work on surrounding yourself with experts right now!
We’ll wrap this up with a few words on the property itself. There are various factors which should contribute to your choice of commercial property. That old rule of “location, location, location” still applies heavily. Ideally, you’ll be close to your suppliers, your customers, and your workers. Depending on the kind of business you’re running, you may need to be close to good shipping, rail or road facilities as well. Once you’ve narrowed your search down to an area you’re interested in, the next most important thing is the physical condition of the building. Look into the way the property was used in the past, and the kind of wear-and-tear it’s gone through. It’s also very important to consider more serious environmental factors, like asbestos or lead-based paints. The allowable uses of the premises are another important thing you have to consider. Anything with four walls and a roof can be pretty versatile, but you need to make sure that what you’re going to use it for coincides with the relevant zoning laws. Industrial spaces are largely limited to manufacturing operations, and you’re generally not allowed to use commercial spaces for production operations. Zoning laws may mean that there’s also various limitations on alterations you can make to the property once you have it. One common example is when the building is in a historic area. Finally, you should be looking for a commercial premises that has some potential for expansion and/or leasing. It will be great if you can grow your business and make use of other areas of the property. If that doesn’t happen though, will you be able to lease some of it?
I hope that this guide has set you off on the right track to finding a great commercial premises. While your commercial property won’t be perfect, this advice should help you towards finding one that’s excellent for your business needs.