Finding the right premises can truly put your business on the map. If you get it right, you’ll have a safe, productive workplace, easy access for people and materials, and predictable costs. If you get it wrong, you could find yourself with a property that’s too far from your customers, unsuitable for your business, or needs much more work than you expected.
Just like with residential property, commercial units include buildings of all shapes, sizes, and categories. You will need to carefully consider not only the type of premises that works for your business now, but also its suitability for future scaling up or diversification. There are also several key differences from residential market leases you will need to be aware of.
In this article, we cover everything you need to know about commercial property leases.
What is a commercial location?
While no two commercial property locations are the same, we can group them into a few distinct categories that suit various businesses and industries. Local authorities can also vary their commercial property classes – yet another point to check when considering a locale.
Certain properties will also combine different types. For example, you may have a warehouse with a connected office or outdoor storage area. You could also consider making adjustments, such as creating an office on a mezzanine floor. However, if you’re planning to make any major changes, you’ll need permission from the current owner.
Storage and distribution centres
The great shift towards e-commerce in recent years has upped the demand for warehouses and distribution centres to help businesses keep goods flowing towards their customers. These properties can be anything from repurposed industrial buildings to expansive, state-of-the-art warehouses away from population centres.
Increasingly, however, businesses are seeing the need for strategic positions within or very close to cities. These last mile properties help businesses compete by providing faster or even same-day turnarounds for customers.
Most storage and distribution centres are located next to major transportation routes, and many are built with specialist functions in mind, such as cold or oversized goods storage. Tenants may also be able to work with landlords to customise their interior space.
Mileway has a range of last mile commercial properties. With options close to major UK population centres, we are helping more businesses take advantage of last mile fulfilment potential.
Industrial units
Industrial properties include commercial buildings used for activities like manufacturing or product assembly. They can also be combined spaces, such as when warehouses also contain offices or workshops.
Industrial units come in all shapes and sizes, from basic spaces no bigger than a large garage to major industrial complexes with multiple loading bays and heavy customisation to accommodate heavy equipment. Industrial properties can be available as standalone buildings dedicated to one business or multi-let properties where you’ll share the space with other businesses. Needless to say, there can be a great amount of variation when it comes to leases for industrial properties.
Retail stores
Retail units include the familiar shops we see in prime locations. They can also be simple counters combined with warehouse units on established industrial estates.
Naturally, different options offer varying levels of visibility for your business. That said, high-foot traffic areas may have less space for functions like manufacturing.
Regardless of your choice, you will usually be expected to fit out the interior of your retail space to meet your needs. You’ll also need to make sure visitors can easily reach you via either car or public transport.
Offices
Office space can serve a number of important business functions. As well as critical administrative purposes, they can also be used to deal with customers, such as when you are selling financial or other services.
When renting office space, you will need to consider:
- Furniture and equipment: Some offices may only have basic fittings, while others may have everything from desks to chairs.
- Accessibility – Is the office space accessible for people and vehicles?
- Energy efficiency – Is the office temperature controlled and well-lit? What are the projected energy bills?
- Facilities – Does the office have bathrooms, kitchens, and other facilities for staff? If not, are there stores or other businesses nearby?
- Internet – Does the property have a fast broadband connection?
- Transport – Are there any public transport links close to the warehouse? Depending on the availability of parking, this could be key for your staff.
You can rent a commercial office space exclusive to your company, or work alongside other businesses. You should consider whether the space and privacy of an exclusive property is better for your business, or whether it would help you to connect and network with neighbours who are part of the same business ecosystem.
Other commercial properties
There are really as many forms of commercial property as there are types of business. Leisure facilities like gyms, hotels, and restaurants are commercial properties. Dental surgeries, health centres, and hospitals are commercial properties. Open spaces of land, like car parks and outdoor storage, can be commercial property too.
It all depends on what your requirements are as a business. You can contact Mileway today to discuss your needs and find a commercial property to suit you.
H2: How to choose a commercial property location
Location is likely to be your biggest concern when choosing a commercial property. If you plan to have customers on site, you’ll need to consider how easy it will be for them to find you. At the same time, your property will have to be convenient and accessible for yourself, your employees, and any visiting clients – especially when it comes to parking.
If you are planning to hire employees in the area, you will need to consider the local labour market. Are there sufficient people with the skills you need in the area, and can you hire them at the right cost? Are there amenities in the area that make it an attractive place to work, like shops, restaurants, entertainment venues, or childcare facilities?
For storage and logistics property leases, you will also want to consider strategic locations where you can reach the largest proportion of your customers at the shortest distance. If you’re receiving and delivering goods by road, you will need to ask about major motorway routes near potential properties. Local property experts may also warn you about any known issues with congestion that could impact delivery schedules.
Whether you are after a prime location property in London or an estate where you can scale up your capabilities, there are several points to consider when it comes to choosing a location.
Commercial property lease types
If you’ve rented a home before, you’re probably familiar with a residential property rental agreement. However, commercial property leases can be a little different:
- Commercial lease lengths – Commercial leases can sometimes lock your business in for multiple years. This can be ideal if you’re investing heavily in customising the space, but less helpful if you value the flexibility to change locations or scale your premises up and down.
- Commercial lease repayment schedule – While monthly rent payments are common in residential property rental agreements, commercial properties often have a quarterly payment schedule. You may find more flexibility in the terms of the agreement than you’ll typically find when leasing a residential property.
- Commercial property maintenance – Commercial tenants are usually responsible for some property maintenance or management costs. This can include the fitting out and upkeep of the property itself, along with maintenance of any shared facilities like communal parking areas, access roads, and landscaping. You should examine these details carefully and be sure to include any costs for commercial tenants in your budget. Failing to keep up with your obligations could result in lease forfeiture.
In all cases, you should check your property lease documents carefully to make sure you understand and agree with the contents.
Insurance in commercial properties
There can also be marked differences between insurance for commercial properties and policies for residential spaces. Commercial tenants will be expected to insure the contents of their property, including any stock or equipment, and cover their business and anyone who visits or works there.
In most cases, the commercial building itself will be insured by the property owner. You should check your agreement carefully and speak to your real estate agent or property manager to make sure you’re clear on what’s covered.
Budgeting for your commercial property
Like a residential property, your commercial property costs won’t be restricted to rent. You will also need to consider:
- Utilities
- Service costs
- Property maintenance and management costs
- Interior furnishing and equipment
- Local property taxes, business rates, and relief schemes
Renting commercial property from a trusted real estate partner
Mileway’s extensive commercial real estate portfolio makes it an excellent choice for both new and established businesses looking for their next rental. In some cases, multiple units are available on the same estate, which offers the possibility to expand your premises as your business grows.
Want to find out more? Contact Mileway to speak to one of our local experts today.
FAQs
Do I pay stamp duty on a commercial property lease?
Yes. In the UK, it is the responsibility of the tenant to pay stamp duty on a commercial lease. You may also need to pay again as part of a lease renewal, though this will vary from policy to policy.