11 questions to ask when buying commercial property for the first time

Buying your first commercial property is an exciting but daunting prospect – it’s a significant investment into your business but it requires plenty of research and due diligence to ensure you’re choosing the right space. When you are buying premises for the first time, doing your homework is everything, and this is where Squarepoint Chartered Surveyors can help. We’ve put together 11 questions you should be asking before you invest in a commercial property.

1 – What is the purpose of the property purchase?

No matter what type of commercial property you’re looking to buy, you need to be clear on its purpose. The biggest mistake you can make, whether you are buying to occupy or invest, is to proceed without a clear plan for why you need the property and the purpose it will serve. Create your purchasing criteria before you start looking so you can be confident that the properties you view will meet your specific needs.

2 – What’s the condition of the property?

You don’t want to occupy a property that’s falling apart or in need of costly repairs, so make sure you thoroughly inspect for any signs of damp, electrical or plumbing issues, or roof problems. Having a condition survey carried out by a qualified surveyor will give you a professional overview of the property’s condition and may reveal issues that affect your negotiating position on price.

3 – Is the property in the right location?

Location matters, particularly in business, so you’ll need to assess whether the location of the property in question is right for you and your company. The industry you work in will impact the type of location you need, a retail space, for example, will benefit from a central location with plenty of footfall while a business where customer parking is needed might benefit more from a building on the outskirts with more space. You may need access to public transport for your staff or need to determine the level of competition nearby. All of these factors, and more, will be critical to deciding whether a location is right for your business.

4 – Do you have a realistic investment budget and ROI goals?

Investing in property shouldn’t be an emotional decision but all too often it is. First, set a firm budget and stick to it, don’t overstretch yourself and make sure you can comfortably meet your payment obligations. This includes allowances for often-overlooked costs such as professional fees, Stamp Duty Land Tax, mortgage arrangement fees, ongoing operational and maintenance costs, construction or repair costs, and environmental compliance costs. Your accountant or financial adviser can help you set realistic ROI targets for your specific situation, taking into account the property type, location and market conditions at the time of purchase.

5 – Have you sought advice from commercial property professionals?

While it’s important to see the property for yourself, you also want to take advice from experts in the industry. When you’re buying commercial property for the first time, there are bound to be factors you haven’t considered or might overlook, so having a second pair of eyes can really help you make a sound investment. From an experienced accountant and conveyancing solicitor to a thorough commercial building survey to avoid any nasty surprises later on, rely on professionals who have the experience to assist you in this venture.

6 – What is accessibility like?

Alongside practical considerations such as parking and vehicle access, it is important to assess how accessible the property will be for staff, clients and visitors. Whether you are buying a retail unit or an industrial building, accessibility should be reviewed early to help avoid costly issues later.

Under the Equality Act 2010, employers and service providers may be required to make reasonable adjustments where disabled people would otherwise be placed at a substantial disadvantage. Before committing to a purchase, consider whether the property offers step-free or level access, adequate circulation space and facilities for wheelchair users, lifts or suitable alternatives to stairs in multi-storey premises, and appropriate access for industrial or delivery vehicles where relevant to your operations. If works are likely to be needed, the potential cost of making reasonable adjustments should be factored into your budget.

7 – How much flexibility does the property offer your business?

Assuming that business growth is your objective, as it is for so many, it’s a good idea to find premises that allow you to adapt and expand. Commercial property is more sensitive to economic movements, so your new property should be adaptable to any shift in market trends and changes within your business operations. Could you repurpose the premises to protect your investment and minimise costs if it came to it, such as for co-working spaces, storage facilities, subletting or parking? You also want to consider whether there are limitations on what you can do within the property. If changing aspects of the building is something you want to do in the future, make sure this is possible before signing on the dotted line.

8 – How has the property performed historically?

A property’s track record can tell you a great deal. Before committing, try to establish how long previous occupants stayed, whether there have been extended vacancy periods and, if so, why. Find out the reasons previous tenants left, whether lease terms, business performance, footfall or the physical condition of the premises played a role.

Ask your surveyor or solicitor to check the planning history for any applications or decisions that could affect use or value, and consider whether any nearby development in recent years has changed the character or commercial viability of the location. This kind of evidence-based background check is far more reliable than assumptions about the property’s potential.

9 – Is the property eligible for any relief allowances?

The government’s capital relief allowances are aimed at rebuilding communities, so your property may well be eligible to claim Capital Allowance (against taxable profits), Business Premises Renovation Allowance (BPRA) in disadvantaged areas, or Land Remediation Relief from corporation tax. We highly recommend that you check with your local estate agent or broker.

10 – What is adjacent to the property?

It’s worthwhile paying attention to what’s surrounding your commercial premises. For example, if you’re buying a retail property, you want to make sure you’re not setting up right next to a direct competitor, but also that the businesses around you are performing well, as this may indicate your own potential for success. Similarly, consider how any nearby development projects or construction works might impact your business operations in the short and medium term.

11 – Are you sure you’re ready to go through with the purchase?

While there’s no such thing as a risk-free investment, it is essential that you take time to weigh up the pros and cons of the commercial premises you have your eye on, so you can be sure that you are making the right decision for your business. Investing in commercial property is a significant financial commitment, and you need to carefully evaluate factors such as location, condition, zoning regulations and potential for growth or redevelopment. Conduct thorough market research, consult with professionals like commercial estate agents, lawyers and accountants, and analyse the property’s potential ROI, including operating expenses, to make sure you’re getting a good deal.

Commercial property is generally a longer-term commitment than many buyers anticipate. Unlike residential property, which can sometimes appreciate rapidly in hot markets, commercial values tend to move more slowly and are more sensitive to economic conditions. Whether you are buying to occupy, to let, or both, make sure your plans are based on realistic assumptions and that the numbers work under different scenarios before you sign.

Contact Us

At Squarepoint Chartered Surveyors, we offer a full range of commercial building surveys to help with your purchase including Acquisition Surveys, Condition Surveys and Disability Access Surveys. To discuss your surveying needs and share your plans to buy commercial premises in London, please get in touch.