What to consider when buying a commercial property

Buying a commercial property is considered a significant milestone for a business that requires careful consideration and strategic planning. Whether you are an entrepreneur looking to establish a new business location or an investor seeking to expand your portfolio, buying a commercial property is complex and demands a well-informed approach.

In this article, we will delve into the considerations that should be at the forefront of your mind when buying a commercial property.

What considerations should be made when buying a commercial property?

When considering a commercial property, numerous factors warrant careful consideration. Our team of commercial property experts has categorised these into two lists: Business considerations and property considerations.

Business considerations when buying a commercial property

1. Location and Accessibility – Examine whether the property is situated in an ideal area for customer and supplier convenience, proximity to transportation hubs and easy access for clients and employees, including adequate parking facilities for both your immediate and long term needs. Additionally, investigate any local zoning laws and regulations for on street parking that might have implications for your business.
2. Market Trends and Demographics – If customer footfall is important to your business examine the current and future market trends in the area to ensure the demographic is your ideal target market. As well as understanding the potential growth and competition within the area. 
3. Costs and Financial Viability – Consider all the costs that the business will incur in buying the property, including the purchase price, rateable value, utility costs, insurance and other taxes. What renovations are required, get realistic quotes for this and factor in a safety buffer (there will always be unexpected costs). You also need to consider the ongoing operational costs of the property and your business to ensure the business can afford it (as we know many viable businesses fail due to lack of immediate cash flow).  Most business owners are aware that stamp duty land tax may be payable on the purchase price when buying a freehold property but even if you take out a short term commercial lease there may be stamp duty land tax to pay. Click here to use the Government’s stamp duty land tax calculator to find out what you may have to pay.
4. Regulatory Compliance – You will need to look at local laws and regulations, which could affect your business operations. This includes but is not limited to planning laws, building regulations, parking restrictions, environmental regulations, necessary local permits and any potential legal risks or liabilities associated with the property. 

Property considerations when buying a commercial property

1. Physical Condition and Structural Integrity – We recommend conducting a full inspection and survey of the property before you buy it or lease it. You should employ a qualified surveyor to do this and if you have any concerns consider specialist reports such as a roof condition report or electrical reports. This will help identify any potential issues, such as structural defects and necessary repairs. During this stage, consider the lifespan of major areas such as roofing, heating/cooling systems and plumbing. If issues are identified then factor this into the negotiations on the price of the property or if leasing the property carve such things as the roof out of your repairing obligation or cover any disrepair in a schedule of condition and limit your repairing obligation by reference to this.
2. Environmental Factors – Investigate the local area and the impact your business will have on that area. Understand the potential environmental hazards your business may face such as flooding or other climate-related risks. Ask questions, such as is the property near a river or other water source, which might make the property vulnerable to flooding. What has  the property been used for previously and is this likely to have had an environmental impact. A desktop environmental and flood report should be carried out as part of your searches and will identify any risks. This is part of the standard search pack which Taylor Bracewell offer.
3. Utilities and Infrastructure – Verify the reliability of essential utilities, assess overall infrastructure condition, including roads and parking and ensure alignment with the business needs now and in the future. It might seem a bit of a “noddy” question but does the property have adequate Wi-Fi and electrical capacity to enable your business to operate. These days every business needs good connectivity to operate. .
4. Security and Safety Measures – Assess security measures, including surveillance and access controls, ensure overall safety for employees and customers and proactively address potential risks with emergency response plans.
5. Aesthetic and Brand Alignment – Evaluate the property’s alignment with the business’s brand image and values, assess aesthetics concerning the industry and explore opportunities for customisation or branding. Again ask simple questions such as where will I put up my signage. If you are on an industrial estate or shopping centre make sure there is adequate rights for you to erect signage on common notice boards to ensure your customers can find you.
6. Planning – Does the property have the correct planning classification for your proposed use? In addition, a title check with reveal any restrictive covenants, which might affect the use. Taylor Bracewell will do a full title check and report to you, flagging up any issues as part of our standard service.

How can Taylor Bracewell’s commercial property team assist you?