Partner Article

Melanie Holmes from ABP Property Consultants shares her expertise

I want to lease premises for my business. What now?

If you’re looking to establish a physical presence on the ground and you’re sure you can cope with the overheads, you have several decisions to make. You need to decide what type of property you need, how big it needs to be, and the location.

What type of property do I need?

This depends entirely on what type of business you’re running. If you’re in manufacturing, you need industrial space. If you’re in on-street retail, you need a shop. If you’re in the service sector, you need an office. These are the obvious distinctions, and you’ll often see property agents divide their portfolios according to these three categories.

Where should I look?

The location of your business will in all likelihood be determined by the financial outlay your business can safely absorb. A lesser consideration may be how far you’re willing to commute. You may want to be part of abusiness cluster, or even project a particular image, but the financial cost of new premises should always be an important factor in your business plan.

What kind of costs should I keep in mind?

Rent:Some landlords will offer a period of occupation at a discount rate or evenrent-freeas an incentive to occupy, after which the standard rental agreed will commence. For instance, the cost of fitting out a shell and core retail unit as a shop or cafe may be prohibitive; the landlord might then choose to offer you six months rent-free in order to help off-set the initial cost, or, as an alternative to a rent-free period, offer to pay half of the renovation cost.
Business rates:Business rates are dependent on location, size, and property type. When a property is unoccupied, empty building rates are paid by the landlord. It’s in their interests to get your business into their property; an unoccupied commercial property is a loss-making property.
Service charge:If you’re one business in a multi-let building or on an estate, you’ll probably be occupying on a rent plus service charge basis. This means that the landlord undertakes the cleaning and general management of the property and site, and charges the cost back to the tenants. It’s worth asking a lot of questions about this cost, as it can be a source of some confusion for tenants, landlords, and agents alike.
Professional advice:You’ll need a solicitor to look over any legal documents, and if you’re sensible you’ll instruct anRICS-certified property surveyor to ensure any deal proceeds with your interests at its heart. A surveyor will be able to advise you on the best possible location for your business, the rental value of the property you choose, the rateable value of that property, anyplanning permissionsrequired, and handle the other paperwork that comes with closing a property deal. For instance, in the case of our shop renovation, a surveyor would probably prepare aschedule of conditionto guarantee both parties against damages to the property incurred over the period of occupation. Note that all professional services come at a cost and should be factored into your business plan.
Utilities:Some landlords may include utilities payments as part of the rental agreement, while others will expect you to make your own arrangements. Still others will have arrangements withutilities brokersand will sell electricity to you directly. It’s worth doing the sums; if you’re in the right location, it may make more financial sense to opt for an all-inclusive rental deal than arrange your own provider.
Parking:This is something you should definitely keep in mind, particularly if you’re looking for office premises. You may have your heart set on city centre offices, but the parking isn’t going to be great. The landlord may charge you an annual rate for access to a car park or even a single parking space, or you may have to negotiate with other nearby landowners for access to their land.