Buying or leasing a commercial property? Don’t forget these important points

From offices and retail units to warehouses and leisure centres, commercial property forms the foundation of the commercial landscape. Navigating the market, however, is never simple.

Choosing whether to buy a commercial property, or to lease a unit temporarily, is a common stumbling block.

Purchasing a freehold commercial property is a major commitment, and often means tying up large amounts of cash in a single investment, potentially reducing the flexibility of your business, having ownership responsibilities for the property and even taking a bet on the property market.

The upside can be  significant if you select wisely, however. Taking out a commercial mortgage is often cheaper than paying leasehold fees, while you also stand to benefit financially if your property increases in value. You’re also free to make structural changes to the property (subject to any planning consents), as well as let out surplus space to other businesses.

Leasing a property, meanwhile, may be advantageous for a growing business which is likely to upsize or relocate in the future since you’re not immediately tying up larger sums of cash.

Succession planning, financing and development should also be factored into your decision. Ask yourself: do the lease terms fit my business and personal objectives? Can I comfortably finance this investment? How much work (and capital) is required to create a productive working environment for staff? What repairing/maintenance and service charge liabilities will there be?

Once you’ve checked all the boxes, it’s time to think about contracts. Commercial property contracts are often much more complex than residential agreements. The most common hurdles are who is responsible for the repairs to which parts of the property, negotiating rights of access for the public and neighbouring businesses, negotiating lease terms and rent reviews, environmental issues, health and safety and building-specific regulations, licencing, and noise and opening hours restrictions.

To minimise risk and maximise return, contact our commercial property team today.