Whether you’re looking for your first property or are relocating your business, there are plenty of questions to ask if you want to minimise disruption and ensure you get the best premises to keep your operation flowing.
This guide covers the main commercial property types, answering common questions and helping you to make sure you find a place that suits your business best.
The main types of commercial properties
While a commercial property is any space designed for a professional, non-residential purpose, the description can be subdivided into several types, each with its own ideal characteristics. Broadly speaking, they are as follows.
Offices
Every city, town and village has office space of some kind, as it’s where desk-based work takes place. But that is not to say that there’s a one-size-fits-all office space. Large companies will often need thousands of square metres of office space, usually with regional branches.
Smaller companies, such as boutique marketing agencies, can run their entire business from a moderate office with 20–30 staff. And a local garage might need enough office space for two people and a computer.
Location and style are also key attributes for the office. Firms like solicitors, large accountants and banks will often set up in city centres to access a wider range of talent and to be closer to clients. The nature of the space will usually be pretty generic, as the most important factor is clustering staff and having plenty of layout flexibility.
A trendy design agency, on the other hand, will tend to prefer something with a little more character, such as a re-purposed mill or church. Although a city centre location is often desirable, a lot of them will set up in fashionable parts of town, which might mean suburbs with bars and restaurants nearby. Again, attracting the right sort of employee is a driving factor here, but impressing clients is also important.
Beyond the look and location, there’s an endless array of added features that add to a property’s desirability:
- A decent kitchen space and dining area is helpful for practical and social purposes.
- Air-conditioning is growing in importance as the climate warms, and the UK is slowly awakening to its benefits.
- Businesses with green credentials will be looking at the Energy Performance Certificate (EPC) ratings to keep a cap on emissions.
- Good fibre connectivity is vital, especially with multiple online assets placing demand on the bandwidth. It’s one factor where rural locations can suffer, and city centres thrive.
- Quality of life elements like natural light, parking, public transport and nearby amenities also play a part.
Take time to understand exactly what is and isn’t included in your rent to allow you to confidently compare and choose an office leasing option that offers the best overall value for you business. If you’re sharing a building with other businesses, it’s important to know where your responsibility ends, and which parts are shared.
It’s also worth reviewing the dilapidation terms, as you will probably have to ensure you leave the space more or less in the condition it was in when you occupied it. Finally, find out what are the minimum lease lengths, and what break clauses there are. If a property ticks most of your boxes but there are a few points you’d like to discuss, remember that most landlords are open to exploring options to suit your business requirements.
Industrial, warehousing and logistics
At the heavier end of the scale is property that’s designed for making, storing and distributing products. That would include factories, workshops, logistics centres, storage units and other manufacturing sites.
The key elements of these types of property are:
- Ease of access for, and placement of, machinery – the load-bearing capacity of flooring, heights of ceilings and doors for moving in equipment (and perhaps the products themselves), and the power requirements for such machinery.
- Access to the road network – ability for HGVs and other large vehicles to access, but also ease of access for motorways, rail freight yards and ports, as required. Loading bays might be necessary for raw materials deliveries and product distribution.
- Industrial properties tend to be away from residential areas for noise reasons, so parking and/or good bus routes are essential.
- Some internal office and security spaces will typically be included, but not always.
Practicality is typically the main priority over appearance for industrial environments, however, some industrial properties need to have exceptionally high levels of cleanliness, such as when dealing with pharmaceuticals, computing equipment or precision engineering.
Lease lengths will typically be relatively long for industrial properties, especially in manufacturing, where the machinery has to be installed at the start of the contract, and removed before its end.
A site visit is a great opportunity to assess how well the property supports your operational requirements, and it is best if experts in the manufacturing process itself go along too, to ensure the property is suitable in terms of space, power consumption and so on. You will also need to find out if your intended work is permitted on the site, and whether there are any restrictions in operating hours, which is likely near a residential zone.
Retail
The key part of retail property is that it needs footfall to survive, which is why retailers tend to cluster together to provide a mix of passing trade and intentional journeys from potential customers.
That said, a retailer can set up shop in the middle of nowhere if there’s an opportunity to sell products – a gift shop near a beach or beauty spot can work, for example. The footfall stipulation remains the decisive factor.
Retailers setting up in shopping centres or retail parks are often required to stick to certain opening times so that visitors can expect the whole retail experience whenever they visit. Opening earlier and closing later than the neighbouring properties might be permissible, and is quite common.
To ensure a retail location has a complementary mix of businesses, a landlord may have specific use requirements, it’s best to discuss your concept early on with your landlord.
Retail space needs room for stock storage, and perhaps a back office for clerical work and a staff room for breaks. The rent varies widely depending on the location, with city centres and busy towns being the most expensive, and suburbs or semi-rural areas costing less, although the price does of course correlate with that all-important passing trade.
It’s a good idea to see for yourself how many people are walking by over a range of times, seasons and days of the week – landlords may also be able to provide useful footfall data, too. You should ask about whether there are restrictions on signage, displays or seating on the pavement outside, or anything else that is specific to your retail and marketing plans.
Leisure and hospitality
A range of properties falls under this category, which includes hotels, restaurants, bars, pubs, nightclubs, cinemas, theatres, gyms and spas. When customers visit these types of places, the core offering is only part of the reason they’re going – they also want an experience, to feel like they are being looked after in a welcoming, beautiful place.
That means the interior and exterior design and ambience are critical, and will be a significant expense when setting up. As with industrial properties, that can mean that longer contracts are the norm, so it’s essential that you have researched the business case for your enterprise to be sure that there’s sufficient demand.
These properties will require specific planning permission for their intended use, which is important if you are planning to take over from a retail space. If you’ll be serving alcohol, you’ll also need to become a licensed premises. Like retail, the cost of the lease will often be dependent on local footfall.
Key questions to explore are:
- Does my specific type of business need planning permission? If so, is it already granted, or do I need to apply for it?
- Are there any restrictions on operating hours or noise?
- Does the property have sufficient power capacity, as well as other services such as gas and drainage? The latter is crucial if you are doing a lot of washing or have showering or bathing facilities.
- What does the lease include? For example, there could be a full kitchen when you view the property, but the present occupier could be intending to take it with them when they go.
Other property types
The above covers the main four property types, but there’s a whole range of business types that don’t fall neatly into any of the categories, or straddle two or more of them.
Examples include care homes, holiday lets, medical centres, nurseries, car parks, self-storage facilities, marinas, mixed-use developments and co-working spaces, but there’s really an endless list.
The important thing to find out from the start is whether you would be allowed to conduct your line of work there, as per the planning restrictions.
Your landlord can provide guidance, but some sectors are hard to define in terms of existing trades, so you should approach the relevant department of the local authority to confirm, or apply for, permission.
What questions should you ask when leasing a commercial property?
There are some important differences between renting a residential property to a commercial property. If it’s not something you have undertaken before, below highlights some important considerations to discuss.
The first question you should ask is whether you are allowed to conduct your type of business from the property you’re weighing up. Where the relevant permissions are not in place, there may be opportunities to apply to the council for planning permission, to unlock the property that would otherwise be a perfect fit.
Cash flow is vital for a successful business, so you should discuss rent payment schedules, and whether it includes VAT. Is there a rent-free period while you fit out the property? What are the service charges and when are they payable?
Find out details on how rent and service charges are reviewed in the future, along with repair and maintenance responsibilities.
You should also ask about minimum lease lengths and break clauses, as your business needs may change quicker than you initially expected.
What about moving to your next commercial property?
One aspect that’s sometimes overlooked when leasing your first commercial property is what happens if you need to relocate.
This can happen for a number of reasons, for example outgrowing your current property, changing operational requirements, moving closer to customers or potential employees.
If a relocation is needed, understanding your lease commitments and notice periods can help to ensure a smooth transition between dismantling your activities at one property and setting up at another.
Building flexibility into your lease initially, can make it easier to respond to changing circumstances in the future.
Understanding your property obligations throughout your tenancy will help to prepare you for the dilapidations agreed, which could mean repair, construction or decorating costs.
Conclusion
Whether you’re looking for retail, industrial, hospitality or office space, there’s a lot to take into consideration, and hopefully this article will have covered the most important points for each type.
If you’re based in the Thames Valley/Buckinghamshire/Berkshire area and are hoping for a smooth transition into your next commercial space, Sorbon Estates is here to help.
We have properties of all sizes for all budgets, in the most desirable locations for the range of businesses we support. We’re always ready to help people with that most important aspect of a business – the place it operates from. Contact our team today.