Finding the right commercial property plays a vital part in the future success of your business. Whether you’re looking for retail, leisure, industrial or office space, our tips for finding the perfect commercial property will help.
One of the most significant overheads for your business will be the rent. It is best to be clear on your affordability before you even start. When drafting your budget, work in costs for factors such as utilities, taxes, maintenance and insurance,. We would also recommend also adding in at least a 10% contingency.
You’ll need a deposit – usually the value of around 3-6 months’ rent plus VAT – and might need a guarantor. Commercial property rent is generally charged quarterly. If this is un-achievable for you, stipulate this to an agent as some commercial property landlords will accept monthly payments.
Business rates and service charges
On top of rent, make sure you budget for business rates, a tax charged on non-residential buildings. Rates are worked out according to the property’s ‘rateable value’. This is based on the open market value set by The Valuation Office Agency (VOA) and are revised every five years.
Remember to take service charges into account. These tend to include maintenance of joint facilities in the commercial property. The more facilities within the property, such as common areas and foyers, the higher the charge.
When finding the right commercial property one of the most important decisions to make is location. Consider the needs of your business and its customers when thinking about the right location. For example, footfall is critical when renting commercial property for a shop, restaurant or cafe. A warehouse would need convenient transport links. If you’re looking for an office, your staff and visiting customers will need good commuting routes and parking.
Look at your local Enterprise Zones and Business Improvement Districts (BIDs), which have been chosen as designated areas to do business. They can come with initiatives, such as tax breaks or government support.
Space and on-site facilities
The amount of space you need depends on the size of your business. Remember to include areas that aren’t on show to customers in your calculations.
If you’re looking to rent an office, consider your staff numbers as well as any meeting rooms needed. There are Health and Safety regulations in place to adhere to when you’re dealing with space for staff, so check these carefully.
Think of the facilities you need to run your business; from the number of telephone lines, ventilation, security and type of power sockets. Also think about meeting room access, kitchen and shower facilities.
There are 17 categories of commercial property usage under the current legislation. When you rent a space, you’re only allowed to use it for the authorised use. Check the planning permissions the property has in place (via the Government planning portal) before considering next steps.
If you want to convert your space, it’s easy to change the use of a commercial property as long as it’s within the same class. Sometimes planning permission will be needed and you’ll always need to check with your landlord. If this is the case factor this into your timings and liaise with your Local Authority.
Legislation and compliance
When looking for a property to rent, study the relevant legislation. Speak to your local council and Trading Standards to make sure you’re the right side of the law. If you’re setting up a retail outlet, the look at the Sales of Goods Act 1979 and The Supply of Goods and Services Act 1982 so you’re selling products as described. Always stick to legal trading hours and abide by all Health and Safety regulations.
Evaluate and negotiate the lease
To secure your property, you’ll be asked to sign a license or lease agreement. A license is appropriate if you’re looking to occupy the property for a short time, while leases are a more long-term legally binding document between the tenant and the landlord.
The Royal Institute of Chartered Surveyors (RICS) recommends checking the frequency of rent or fee payments before signing any contracts. Also revise the break clauses, which allow you the flexibility to break the contract (often with six months’ notice) and bear in mind any rent reviews.
If you’re planning to sublet, check for any restrictions in the lease.