When searching for your next commercial premises, the first question you’ll need to ask yourself is whether you should rent out a space or purchase one for yourself.
There are positives and considerations attached to both options, and you’ll need to do your research in order to make sure your business is set up in the best possible place. Some of the key questions you’ll need to consider include:
- What are your core business needs?
- What can you currently afford and are you prepared for hidden costs or rising rental rates?
- Could you work from home?
- What are you looking for? What essential features do you need?
- Size and layout?
- Facilities and special requirements?
- Is there enough space for growth?
- Storage needs?
- Locations versus affordability?
With these in mind, let’s take a closer look at the benefits of both renting and buying a commercial property, as well as exploring the various factors you’ll need to consider in both circumstances.
The benefits of renting a commercial property
Renting is a popular choice among businesses because it’s easy to find rental properties in almost any area. Renting can be more flexible, as you’re not tied down with a property you don’t need if circumstances change. It’s also cheaper than buying in terms of the initial costs.
You’ll usually agree to the terms of a lease before signing it, meaning you’ll be offered some protection by a binding contract.
Things to consider when choosing a rental property
There is plenty to consider when renting a commercial property. You may have to pay a premium to buy the lease, and you may also have to repair or maintain the building yourself depending on the terms of your contract. You also may be restricted in how much you can personalise the space.
Be sure to check for hidden costs, clauses and the length of your lease. If circumstances change, you don’t want to be stuck in an extra long lease you no longer need. You’ll also have to check for other costs and responsibilities like Health and Safety, gas and electricity, new equipment, vehicles, moving costs and IT.
Before agreeing to a lease, ask the right questions. These include: Can I change the use if necessary? Can I make alterations? Are there service charges? What deposit do I have to pay? Is the rent fixed? Will I have to put things back to the way they were when I eventually leave?
The benefits of buying a commercial property
When you own your own commercial property, you have the freedom to personalise it however you see fit. You can choose layout and décor, and you can stay for as long as you like. You’re also making an investment rather than just throwing money into rent, and there’s always the chance that the value of the building will increase over time.
If you need to, you can even rent out part of your commercial premises yourself and make a profit this way.
Things to consider when buying a commercial property
The key consideration when it comes to buying a property is of course affordability. Do you have the funds you need to make the necessary payment outright? You’ll need to consider what your maximum price is, what offer you’ll start with and what other costs may add to your budget.
These other costs may include maintenance, repairs, stamp duty, solicitor’s fees and building surveys. There’s also insurance, utilities and possibly IT service charges to consider.
Luckily, there are plenty of options out there to help you afford the necessary payments you’ll need to make. If you are looking to bridge the gap between the sale of one premises and the purchase of another, companies like Glenhawk offer flexible short-term finance solutions.
However, you choose to proceed in your business, it is important that your plan caters for any fluctuations in cashflow that may occur.