Whether your business is finding its first home or moving, choosing the right premises is critical to your business’ success.
This decision can be overwhelming, which is why this article will guide you through the vital commercial and financial factors involved in choosing business premises.
The questions around location can be broken down into accessibility, price and the impact on the market.
Is the property accessible?
The premises must be accessible so that customers can find you and employees will want to work there. The proximity of your location to your customer and employee base, public transport, parking and disability access should be central concerns.
What is the price?
Be cautious of new developments, new suburbs or areas with vacant property nearby, these are often cheaper, but the lower price may indicate that this area is not good for business. Research your area and look for perks – setting up in a certain area might entitle you to grants or other financial services.
Impact on market?
Consider where your competitors are and decide if you want to be in an area that attracts customers or if you want to have exclusivity over an area.
Drawing up a good property specification, which includes all the essential and desirable aspects you are looking for, will stop you wasting time looking at premises which are totally unsuitable. In your property specification you will need to consider:
- Space and layout requirements that account for flexible work arrangements, activity-based working, storage and the potential for business growth
- Planning approval needs and licenses
Lease or buy?
The decision to lease or buy should hinge on the specific circumstances of your business as there are pros and cons to both options.
Leasing gives you less flexibility and more security, which is why established businesses typically lease. Here are some considerations:
- Leases give you security for the tenure of the term
- You may be liable for the rent of the whole period of the lease, even if you vacate the premises early.
- Most leases include rent reviews at fixed periods so in a rising market your rent may increase or if rents fall you may be stuck paying above market rates for several years.
- The landlord is usually responsible for external repairs and maintenance.
- You can usually make alterations with the landlord’s consent but may be liable for removing alterations you have made.
Buying the premises outright
Buying the premises provides more freedom but a greater financial burden.
- Few businesses buy premises unless they have large amounts of spare cash and are looking for a long-term investment.
- You have more flexibility to alter the premises and move in and out in theory, your move will still be subject to market conditions and the ability to find a buyer
- You have the option to become a landlord and lease the space to other businesses if your business winds up
Searching for premises
The search and selection process can be time-consuming and complicated, which is why you might consider engaging a range of services or involving certain individuals.
Visit commercial agents.
Consider visiting several commercial agents who are active in your target area, give them your property specification, question them about the state of the market and discuss the most suitable properties with them.
Hire a chartered surveyor
Unlike commercial agents, who work for the landlord or seller, chartered surveyors will protect your best interests. They can recommend a shortlist and negotiate price and contract terms for you.
Involve your professional advisors
Before committing to any legal agreement, involve trusted professionals. Depending on the circumstances, there may be a need for a structural survey, legal due diligence and much more.
Our recent move at ESV has taught us the importance of collaboration with trusted professionals. Should you require financial, business or tax related advice on moving premises contact your ESV engagement partner on 02 9283 1666.