Finding new office space can be a major headache for a growing business.
It’s not just about having the extra room into which to expand, but having the right space that suits the business’ needs; it could be the difference between your future success and failure.
While good premises in the right location can attract new staff and allow you to build your network and supply chain, the wrong premises in the wrong location can have the opposite effect.
The process of finding new premises can be both expensive and time-consuming.
So what should you consider when looking for a new place?
Decide what you want and why you want it
You should carefully consider exactly what you want and need from your new premises before you even start looking.
For what purpose do you want to move to new premises? Is it simply the need for extra space for your growing number of staff, or do you want a new building in a prime location to attract more business?
Considerations such as size, layout, structure, appearance, facilities and access should all be taken into account.
Obviously finance will be your most important consideration. What is your budget? You might be able to afford the initial outlay but have you considered the ongoing costs of a new premises?
Do you buy or rent?
Buying new premises gives you more freedom and flexibility to do what you want with your new space and the potential to forecast your finances with more certainty, especially with a fixed-rate mortgage.
However, buying can also tie up your capital.
Renting ties up less capital, allowing you to invest more in the business, and gives you the flexibility to relocate more easily...
Renting considerations
Occupancy of commercial properties is usually by way of a lease or alternatively but less commonly by way a licence. A lease will be for a fixed-term. As a tenant you will need to consider whether a break clause can be agreed with the landlord so that you can terminate the lease at a fixed point during the term. The repairing obligations must be given very careful consideration and it would be good practice for any tenant taking a lease of a building that is not new to have their repairing obligations qualified by reference to a schedule of condition. A licence will typically not be for a fixed term but will continue until either the landlord or tenant terminates on typically 28 days’ notice. Whilst a licence gives a tenant greater flexibility and will have less onerous conditions it gives much less certainty as to the duration of their occupancy.
A competent solicitor specialising in commercial property will be able to help you get the best terms and make sure you are sufficiently protected.
Buying considerations
If you decide to buy and you’re happy with the price you can make a conditional offer to the agent.
You need to make sure you are able to raise the required finances and that there is a satisfactory building survey prior to exchange of contracts. You should also look into whether there are any planning restrictions and whether you require planning consent for your proposed use or to make structural alterations if required.
Using surveyors and solicitors
You should invest in a full structural survey by a qualified surveyor to assess the value and structural condition of the property. This will reassure you and your mortgage lender that the building is suitable and that the investment is sound.
When it comes to the conveyancing you should employ the services of a competent commercial property solicitor.
They will help you understand the details of the contract and your rights and responsibilities as well as carrying out searches and checks to identify any issues with the property or the ownership.
They will also be able to negotiate on your behalf to get the best terms, reassure your lender that the investment is sound and complete the transaction as quickly and efficiently as possibly.
By Michael Price, head of commercial property at DJM Solicitors
