Choosing to lease new business premises is a significant step as your rent generally represents a significant chunk of your monthly overheads. It is important however, that you are sufficiently aware of the process of securing commercial property for your business.
Before signing on the dotted line you must be 100 per cent sure that the new premises are right for your current and future needs to enable your business to flourish and expand. It is believed that two thirds of all new businesses fail within the first three years, so beware of the length of your lease and the legal implications if you may suddenly need to consider terminating it.
Peter Knight, director of Manchester-based commercial property managers Knight Morris said: “There are a number of important differences between renting residential property and commercial property.
In fact commercial tenants have far less protection than residential tenants, with any lease agreed effectively binding on you and your organisation. Securing a commercial lease is open to negotiation on almost every level, so ensure that you have legal advice close at hand. Take a qualified surveyor or solicitor out for a cup of coffee and allow them to interpret the terms of your commercial lease in layman’s terms.”
With any new business plan it is advised to consider introducing a break clause which gives you a much needed safety net in the event that things don’t go as planned. A break clause allows you to terminate a commercial lease after a certain time period whilst having the option to remain in the property.
Peter continues: “A property management service can take an overall look at the market and perhaps identify a site which is less risky for the business, more flexible and ultimately more cost effective until the economy recovers and business improves. As experienced property consultants, they have the right network in place to source premises for lease, which may not have made the open market yet or will be in a better position to negotiate a better deal on those that are.”
Commercial property management companies can navigate complicated leases so you know exactly what you’re letting yourself in for. As well as explaining the hidden costs such as the likely set up, land remediation and building running costs and ultimately the exit liability which can be hidden in legal jargon.
When negotiating the length of your commercial lease it is widely accepted that the longer term you commit to the lower the rent you will pay. You should also be prepared to factor in a rent review after a set period of time as rent can fluctuate depending on the prosperity and demand of your location.
If you need assistance with your commercial lease options please call Knight Morris on 0161 300 3001.