Topic overview

Commercial premises

Commercial premises

Once you have decided you need premises for your new business, you need to think about what type of premises you need – office, retail, industrial unit, garage, other or mixed?

Premises size and appearance

Size matters, so think about layout and how much space you need. Obviously, you should minimise costs, but better to have slightly too much space than not enough. You don't want to be hindered by cramped conditions, plus, there are health and safety rules to observe. So think carefully about how much space you'll need or what storage facilities you'll require.

Also think about appearance, because this will affect perceptions of your business. If customers won't be visiting your premises, this is less of an issue. However, if they will be and your premises look unclean, untidy, unsafe or old-fashioned, customers could be put off – and that's without considering the negative effect it can have on staff morale.

Legal requirements

Businesses must also make 'reasonable adjustments' to their premises to enable access for staff, customers and visitors.

Planning permission is not necessary for minor changes to building interiors. More significant alterations are likely to require planning permission, so check with your local council first. All major work must conform to building regulations, of course. You could require planning permission to use your home as premises if this fundamentally alters how the building is used or affects the surrounding area.

Premises location

Weigh up how easy to reach your premises need to be, especially if you plan to employ people or need customers to visit you. If you're looking to find an office or warehouse space, how good are local public transport links? What about parking? Commercial premises or industrial units in more remote areas might be cheaper, but that's no good if customers and employees can't reach you.

If you'll be relying on footfall, location is critical, of course. Even in busy places, some locations are more popular than others, but there are cost implications, too. Prime locations usually come with prime price tags – particularly if you're looking to open a retail business.

You also need to consider other businesses nearby. For example, a smelly take-away could put off your customers. In other cases, a take-away might be good for your business. In most instances, locating your business too close to your competitors isn't wise. Before deciding on premises, find out how much competition will be on your doorstep and what potential customers think of your proposed location.

Searching for premises

Decide how flexible you are about condition of premises. Are you willing to adapt or improve them – or is that hassle and expense you don't want? Will you need to make specific security arrangements?

Also beware that some rental/lease agreements forbid alterations. In other instances, a landlord might be willing to share costs.

Whether to rent, lease or buy – that's the question. There are pros and cons to each. Most small businesses rent property or lease space, because it requires less investment. Buying might still be wise, if you have the means. However, commercial mortgages can be difficult to obtain if you do not have a reliable trading history and a sizeable deposit.

Even when leasing or renting premises, you'll need to stump up a deposit, the size of which will depend upon on the length of the lease/rental agreement.

Before you start looking, draw up a list of requirements including type, size, location and budget. It will help you avoid wasting time spent looking at unsuitable premises.

Local newspapers, the trade press and property websites are good for leads. Talk to other businesses near your preferred location or ask commercial property agents what they have available. Give them your list of requirements and ask them to put you on their mailing list so that you are first to hear about suitable new premises when they come onto the market.

Local councils, trade associations and business support organisations such as innovation centres and start up hubs may also provide premises for start up businesses on favourable terms.

Make a shortlist of suitable properties and view as many as you can. Score them against your list of requirements.

Premises costs

Renting or leasing might include additional monthly costs for which you hadn't budgeted (eg service charges and utility bills), while buying will involve professional fees. Find out how much business rates and buildings insurance will be, too, because these can add significantly to your overheads. Set a monthly premises budget and search accordingly.

Seek professional advice before signing any agreement and walk away from contracts whose terms are weighed unfairly in the landlord's favour. If possible, seek clauses that allow you to vacate the premises early.

RICS Small business property guide

If you're taking on business premises, you will face a few key decisions - from choosing premises and negotiating a lease to challenging dilapidations claims and sub-letting.

RICS (Royal Institution of Chartered Surveyors) has produced a comprehensive guide to:

  • Finding the right premises
  • Taking a lease or licence
  • Property valuations
  • Business rates
  • Property valuations
  • Rent reviews
  • Construction, alternations and planning permissions

Download the RICS guide here.

Please note: This guide is no substitute for professional advice. You can find a professional surveyor on the RICS website.

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