Commercial property is real estate that is used for business activities. Picture a typical ‘UK High Street’, that is a prime example of commercial real estate.
Commercial property can house business operations or be used to generate profit. The designation of commercial property implicates how it is financed, taxed, and the laws associated with such.
There are many common forms of commercial real estate, such as office buildings, supermarkets, restaurants, shopping outlets, industrial estates, manufacturing factories and more. Usually, occupancy rates and sale prices are an indication of business activity in a specific area.
For many businesses, commercial real estate is a necessary investment. They are unable to conduct business operations without a space to do so. The cost associated with commercial real estate is typically higher than residential, however, the return on investment generally matches this trend.
On the other hand, for some businesses, commercial real estate is considered more of a luxury. Independent small businesses who are growing their team and wish to build comradery may choose to invest in an office space, so they can bring people together instead of solely interacting virtually.
Investing in commercial property is commonly regarded as a smart business move. The initial price of commercial real estate, as well as refurbishment, is usually much higher cost than residential properties. Due to the nature of commercial real estate, it is also more likely that the return on investment will be much higher.
When choosing to invest in commercial property, buyers need to consider the residual cost of business rates and insurance. This again contributes to the overall expense of commercial property, which is not required when purchasing residential property.
Unlike residential real estate, buying a commercial property opens investors to the triple net lease. A triple net lease is when the tenant agrees to pay the property expenses such as real estate taxes, building insurance, maintenance, rent, and utilities. This then lowers the price of rent to what would typically be charged in a standard lease agreement.
While there are constant curveballs thrown in the real estate market, the steps to buying a commercial property are pretty simple. It is advised that investors consider these stages as a guide to approaching commercial real estate.
Before making any sort of investment, big or small, it is important to do due diligence.
Commercial property in a lot of cases is deemed the most expensive asset a business incurs, so it’s important to get it right. Without an understanding of a property’s revenue-generating potential, it is difficult to determine the return of investment.
Our team at Blacks Legal have extensive experience in establishing what business needs in a property. If you would like to learn more, follow this link.
Investors will require legal advice when buying a commercial property. Commercial property solicitors will need to ensure no discreet detail is overlooked in the transaction process. Businesses owners tend to be overwhelmed with ensuring the property is best suited for their operational requirements. Hence, they could easily overlook the finer intricacies which a solicitor covers. Legal teams will investigate-
Once these points have been covered, businesses may have renegotiation power for a better deal, including price reduction.
Buying a commercial property can be a long, challenging process. At Blacks Legal, our team of expert Commercial Property Solicitors are ready on hand to ensure the process is as smooth as can be. Each transaction is different from case to case, but we are confident we can help.
If you are currently in the market for a commercial property and require fast, efficient advice, then contact us today.