At some point in your business life, you’ll need to purchase or rent a commercial property. Operational requirements will dictate it.
Of course, the problem is that the vast majority of business leaders aren’t well-versed in these decisions. They have a vague notion that choosing the right premises is vital for “strategy,” but beyond that, the practicalities are something of a mystery.
If you’re confused about what constitutes a quality commercial property, please look at the following items.
The Quality Of The Existing Tenant
Occasionally, you don’t have to do a vast amount of homework when choosing a commercial property. Often, your best bet is to search properties that have existing high-quality tenants. If a commercial space can attract top brands already, it is a sign that it has everything you require or more.
Ideally, you’re looking for a brand that is well established and has been making money for the last five years. These indicators are a proxy for the quality of the commercial premises. If an existing business has been able to make good money operating from the location, then it stands to reason that you’ll be able to as well.
The Quality Of The Infrastructure
While some commercial properties offer an excellent location, only a subset of them also has excellent infrastructure.
Before you sign on the dotted line, you’ll need to check the quality of the internet and utility connections. High-quality fittings, such as LESSO pipes, fiber-optic cable, and new electrical wiring, all mean that you can avoid maintenance on your structures for longer.
Low Gross Rents
Commercial property is a liability on your balance sheet if you choose to rent. For that reason, you need to look out for deals offering low gross fees. Please note that some landlords will charge additional fees depending on how you use the premises. Often the headline cost is much lower than what you ultimately wind up paying.
For medium and large businesses, renting a separate space is essential. But for smaller companies, that’s by no means the case. Often, you can massively reduce your monthly rental expenditure by choosing coworking spaces that cater to multiple-businesses.
The reason prices are so much lower for these spaces comes from two factors. First, most businesses are willing to pay a premium for the exclusive use of a building. And secondly, the risks of landlords are considerably lower. Commercial premises owners can still generate income even if a specific company goes elsewhere. It’s not an all-or-nothing arrangement – a fact that lowers the price.
Good Lease Agreements
Sometimes, your company has no choice but to take out a lease on a commercial unit. You need it to make money. Ideally, though, you’d like favorable terms on the lease. You should avoid landlords who insist that you sign up for five years or more. You don’t know in advance whether the needs of your enterprise will change.
If the best option is a property with a ten-year lease, read over the terms and conditions carefully. Sometimes, landlords will offer favorable get-out clauses that allow you to escape, should your business require it.
Some commercial properties look dreadful. The units themselves are ugly, and they’re in run-down areas with high rates of crimes. Unless you’re in a very specific type of business, you ideally want to find a better location.
Remember, the location matters for your business in all sorts of ways. Primarily, it has an impact on who you can hire. When you’re in the right location, you can source nearby talent and get the people you need to succeed. If you’re a long way from your pool of workers, you might not attract them.
Secondly, it can have a major impact on customers if you’re a B2C business. People want to come to attractive premises when they interact with your business. They don’t want to feel as though they’re about to be a victim of a crime. Beautifying the surroundings has a profound impact on how people feel.
Regulatory requirements can play a role when choosing premises too.
Modern commercial premises have to abide by building codes. If they don’t, then it can take you a long-time to sort it out, whether you rent from a landlord or buy outright.
Thus, before you commit to signing on the dotted line, hire a surveyor to give the property a good evaluation first. They will look for things like building errors or harmful substances that could cause your enterprise problems in the future.