Posted: Thu 6th Jul 2023
Whether you’re looking to buy a commercial property or you’re leasing, entering into a commercial contract is high stakes for everyone involved.
The commercial property process can be fraught with complex terms and conditions, and it can be time-consuming to get to the finish line. So, it pays to do all you can to speed things up where possible.
Here are some tips to make the task of finding and securing a commercial property that much simpler.
Should you buy or rent a commercial property?
Searching for a commercial property is a stressful process, and there are pros and cons to buying and renting. Consequently, it helps to be clear on which offers the most benefits for your situation. It will allow you to narrow down your search and keep you on the right track when properties come on the market.
Renting a commercial property may seem like the easier option on the surface, but it’s more complicated than just signing on the dotted line and being handed the keys. There are actually several steps to renting a commercial property and if there are aspects of the terms that need to be investigated, it will significantly slow down the negotiations.
Step one is to identify the location you want your property to be in and the type of property you need. Booking viewings so you can see properties in person will help you make the right choice before you progress to the next stages.
Comparatively, buying is seen as the bigger commitment, and there’s certainly some truth to that. But again, there are considerations to make, such as the responsibility you’d have as the owner of the property to maintain it and keep it in good repair.
Research the market
Any wise investment requires careful research beforehand. You need to know what the market looks like, what sort of prices properties are going for, and how that works with your own budget.
It’s also important to understand what plans are in place for the wider area and how that might affect your future plans as a business, such as whether footfall will be affected.
Thorough research will keep you ahead of the curve and focused on driving results, so don’t neglect to assess the current market and factor in your findings into your growth plans. Market analysis can help investors identify trends, such as whether it is a buyer's or seller's market, and what types of properties are in demand.
Factors such as location, proximity to amenities, green space, scenic views and the neighbourhood's status can also play a significant role in commercial property valuations, while closeness to markets, warehouses and transport hubs can be important for commercial property valuation.
Do your due diligence
Due diligence is essential when searching for a commercial property. It involves analysing the data and documents related to a property, including leases, environmental issues, financial records and other factors that could affect its value or desirability.
The more information you can gather on a property before you sign on the dotted line, the better position you’ll be in to move forward with confidence. For example, it’s relatively easy to find information about the property’s previous ownership or whether any covenants or restrictions are currently in place.
A property survey is wise to prevent wasted time looking at sites that aren’t a good fit for your needs. It will highlight any defects that could be costly to rectify later. It also protects buyers from making costly mistakes that could result in financial losses or legal problems down the line, and it would be imprudent to close a deal before appreciating and fully evaluating the risks against the rewards.
The main goal of due diligence, though, is to thoroughly inspect the fundamentals of the property, seller, financing and compliance obligations to reduce and mitigate financial uncertainties. Although the process of conducting due diligence can be daunting, it's vital to any commercial transaction because it allows investors to make informed decisions about whether or not to proceed with a purchase.
Get financing sorted in advance
When it comes to commercial property, few people are cash buyers. So, if you want to speed up the process of getting the keys, it’s important to ensure you have your financing secured well in advance so there are no hurdles to overcome.
Lending criteria for commercial property are vast, from the analysis of use and the demand for property in a given location to the loan size, the duration of the loan and the experience of the borrower.
Likewise, how much collateral you have and the equity provided will have an impact on the terms of your borrowing. So, you need to be clear on what you have to put down on a property and how much you can borrow, so you can move forward quickly when you find the right place.
Nurture the right relationships
If your commercial property plans involve renovations and extending a property, it can help to have the right people on your side. Get in touch with the local council and planning boards, as well as other key players in local infrastructure, and get their advice on what’s required to help your planning applications run as smoothly as possible.
Tenants and buyers alike tend to overlook the time needed to obtain permits required to build out a space and get ready to open for business. The process can be tough to navigate depending on your location, so getting hold of the relevant information beforehand will put you in a better position.
Having the right information from the start can significantly speed up the process and increase the likelihood of your application being successful. It’s also worth contacting your potential neighbours and community members, as these people can make or break your plans if you don’t have them in your corner.
For so many businesses, having a dedicated property from which to run the company is essential to scaling up and seeing success in your business endeavours. But it can be a challenge to find the right place and move in without any hiccups. These tips will hopefully make the process of securing a commercial property easier and faster, so you can focus on your business as quickly as possible.