With many enquiries for new businesses coming through, I have highlighted some key things commercial tenants need to know.
Leasing a commercial property is very different to renting a residential home. The rules are different and costs such as rates, insurance, carparking and operating expenses are paid by the tenant. Prices are often advertised as net, so when talking numbers remember an additional 15% (GST) plus other extras such as parking are added. Consider breaking your budget down into components. What would you be willing to pay for rent only? Deduct the GST and search in this ballpark. It may pay to call an agent to see whether the pricing you have in mind is realistic. Commercial properties are priced on by a square metre rate and vary based on property use as well as location, condition etc. Operating expenses can vary wildly with the cost for some properties equating to almost half the rent cost. How much are you willing to pay for operating costs and carparks etc?
Research
Before you commit to anything, do some research. This should include background information on the area/s you think you may like to be based in. Consider whether there is a market there for your product. Is it accessible for staff and customers? Is there room for expansion if your business grows? What attracted you to the area? What are comparative properties pricing at? Is it in your budget? If not, can you compromise on area, size or is there more room in your budget without over committing? Is it realistic to take a larger site and sub-lease part of the property to a complimentary business?
Viewings
Take your time when you’re walking through the property. As well as checking out the inside check out the local area. Are the neighbouring businesses complimentary to your business? Is there a lot of brand exposure and commuters passing by? Is this a good thing or a bad thing for your situation? It would pay to visit the area multiple times to see what is happening morning, afternoon and evening and whether this would impact your business. If a lot of parking is required and there isn’t much onsite is there much street parking or parking building nearby. Employee health and wellness is important. Are there local amenities for your workers such as eateries, gyms, parks? Is the site easily accessed by public transport?
The Offer
You should always seek legal and specialist advice on any binding agreement. When you make an offer to lease a property it will be presented on a leasing agreement. This means if the property owner accepts and signs your offer, the agreement becomes binding. Keep an eye out for development clauses, broad obligations, zoning laws, permitted uses and what rent increases will be based on. Ultimately, you need legal and specialist advice before signing an offer.
Steve 🙂
NB: This is an opinion piece based on personal experiences and is not a substitute for seeking professional or legal advice.