One of our directors’ Sau-Wan Lai, gave a short presentation at First Friday Portsmouth earlier this month, to give the attendees a little food for thought in their business journey.
As commercial property advisors, we deal with business spaces day in and day out, and provide landlords and tenants advice about their rental or owner-occupied properties. After staff, property is a business’s next largest expense usually. We have moved from the traditional thought process of “I am a business, therefore I should occupy physical space” and business owners now have more options, such as flexible space, co-working space and virtual spaces. However, if you don’t know about these things, how can you possibly explore them? You “don’t know what you don’t know” is a phrase that comes to mind.
Therefore, Sau-Wan wanted to highlight a few points to consider, and we set them out here for you to reflect and review for yourself.
We posed the main question – “Do I need business space?” and this really broke down into further questions about the business.
Firstly, we would suggest you look at your own business, and ask yourself what type of business you operate – are you public facing, do you need customers to be able to visit your business or is it a type of business that is more behind the scenes / not public facing?
For example, you can be a tattoo artist and your customers certainly need to see you. Or you are a retailer – you can have a shop but also you can be e-commerce and be virtual. If you’re a website designer – you are more likely to be able to work virtually and not require an office to sit in.
For some, it could be a side-hustle or hobby that has taken over your home and you need space for your stock, or need a separation from business and personal life. It could be you do not need a full time space, perhaps a co-working space or shared space with another business could be an option? Or you can make do with remote working and just have a virtual presence.
Secondly, who are your customers? What are their habits? Would they prefer to meet and visit your premises? If you are an accountant, your clients might prefer to visit you in your offices to discuss matters, or an estate agency that needs a window to display the properties.
You may need or require passing footfall to generate business, such as a beautician or hairdresser. But if you’re an ecommerce shop, and just require storage and stock space, you could be less visible and be more warehouse or back-office. If you’re in a business that can be working in the background, or be specialist that you invite clients to you or they specifically seek you out, then you might not need premises that are highly visible.
Where you locate you business can depend on your clients, and the location can vary in rental from a busy high street and prime commercial area to a secondary or tertiary location, which is perhaps less prominent, rural or tucked away. If you reflect on this and the customers you have, this can drive your choice of location, if you decide you do need space.
Having decided you need space, you now consider the costs, what would the likely costs be for the business? Overheads to consider is not only the commercial rent – which can be either expected by the landlord quarterly in advance (3 months) or monthly in advance, but you would also need to contribute or pay for the building insurance as well as your own business insurances (there are various you would need and an insurance broker would be advisable).
You would also be responsible for utilities, such as energy, water, broadband etc). And in terms of repairs to the building, if you rent a property – if it is residential for example the landlord would be responsible, but commercial tenants do not often consider that they will be responsible for the repairs if the lease says so. A full repairing lease will put the burden of repair onto you, for example the roof, the walls, the boiler – if these need repair, will be your liability as tenant. However, if you have an internal repairing lease or no repairs, the rent would likely be higher to reflect that the landlord will need to be responsible. On an internal repair, you would not likely need to look after the structure, and for this “benefit” the landlord would usually factor in a cost to cover this, so the rent may be higher than a lease that is full repairing, where the tenant is responsible.
It would be advisable to seek legal advice and a solicitor will be able to guide you on your responsibilities and burdens. A lease is a binding contract and it is better to seek advice now, then sign up to something that you do not understand fully and end up with burdens that can become financial and possible affect more than your wealth, it can affect your health and personal life too.
Finally, and this is not in any way an exhaustive list of costs, or even questions to ask yourself, as this commercial property rental and ownership is a complex process, but for the purposes of the First Friday Portsmouth presentation, we rounded up with how you go about finding the property you have decided upon.
We would recommend you look online, there are several commercial property search websites – Estates Gazette, Rightmove Commercial, as well as commercial agents such as ourselves, you can also walk the streets looking for agency boards.
We suggest researching the area you would like to be, what businesses are there already, competitors or complimentary businesses, and vacant spaces. Some times not all spaces are advertised, and if somewhere is vacant, try putting a note in the door or look up the owner on the land registry.
Lastly, word of mouth can be another way to find property, do not be afraid to speak to your friends, peers or colleagues about your business plans, they may well know someone that owns property that happens to be looking for someone. Be vocal, and you may well be signposted to someone, not all opportunities make it to “the market” so to speak.
We hope that these questions posed resonated with you and you find it helpful on your business journey. We are commercial property advisors, agents and valuers, and would be able to guide you on your leasing needs, help negotiate terms and make the most out of your opportunity. Investment in our services, could save you in the long run, after all you are an expert in your business, we are experts in commercial property.
Video of a version of this presentation – https://youtu.be/nOUDaGwJYB4
