Whether your business is upgrading, downsizing or simply out growing your current premises, you may be considering a new location. Searching for a new property can seem like a behemoth task, choosing the most appropriate commercial property is a critical decision for your business and can impact your sales, the staff and any future opportunities.
Your new commercial property choices should focus on helping your business to operate effectively without excessive or unnecessary costs. Different commercial property options will suit different businesses. By taking into account all the relevant factors, including legal issues, you can identify suitable premises at a location that meets the needs of your current business, your future business, your customers and your staff.
Requirements to Consider
Your commercial property search should include an extensive list of requirements, the initial list of considerations could include:
This is the first and most obvious decision when searching for a new commercial premise. What are the advantages and disadvantages of the new location, do they match your future business plans, will the new location provide flexibility for change in the future, what type of passing traffic will the new location attract, what image is the new location projecting?
The structure of the building, i.e. office, retail, industrial, warehouse, showroom, medical/consulting, hotel leisure, farming; Structure and appearance, both internal and external; Any special requirements including high ceilings, access points, storage.
- Facilities & Access
You will need to provide a suitable and comfortable environment for your employees and visitors - these include access, lighting, toilets, showers and kitchen facilities. Also consider access and parking space for deliveries, customer access, including disabled customers.
Delivery restrictions may also be in place in the surrounding locations. This can make it difficult for your suppliers to deliver goods. You need to make sure that your premises are accessible if you require a constant stream of deliveries.
- Future Plans
What are your short and long-term business plans and how will these affect your property choices?
- Fit Out
If the property is available with existing fit out that suits your requirements, is the owner willing to allow a new fit out and in some cases will the owner pay for the updated fit out. Will you need the flexibility to alter or expand the premises in the future?
- Size of Property
How many employees will be located in your new premises, will you need space for further head count growth? What machinery and equipment will you also need allowance for; can this be easily installed in the new location?
Consider not only essential facilities required to support your business including post offices, banks, delivery services, newsagents, hardware stores, office supply stores but also those that your staff may need including food halls, restaurants, dry cleaners and cobbler services, coffee shops etc.
- Public Transport, Access & Parking
Good public transport links and local parking options make it easier for employees, potential employees and customers who don't live within walking distance.
What will your business require? Consider power and drainage, and any special requirements that are essential to your business function - for example, three-phase electricity, IT server room, intercom systems, hardware and machinery.
- Planning Permissions
What type of business zone is your new location in, are there planning permissions to use the premises for the type of business you have in mind?
Do the suppliers you are working with, including real estate agents (including a buyer’s agent), stock and station agents, business agents, strata managing agents and on-site residential property managers hold an appropriate license?
Who of your competition are in the area, would this be an advantage or disadvantage to your business?
- Business Plans
What business plans do you have in place; will the new location meet these business plans and will there be room for further growth?
Budget & Costs
Your commercial property choice will depend on your budget:
- Initial Costs
The initial purchase costs of your new property will include an extensive array of charges including legal costs such as solicitor’s fees and professional fees for surveyors if your are purchasing your property to agents fees and stamp duty if you are renting your new location.
- Fit Out Costs
Your fit out budget must include costs for the initial alterations, fitting out, hardware, electronics, signage and decoration of the new site; and any future changes you may need to make, i.e. expansion of premises facilities or increase in staff head count. You will also need to allow for any alternation that may be needed for signage, WHSQ alterations and fire/safety measurements.
- Ongoing Costs
Ongoing rent, services and utility charges including water electricity and gas. Continuing maintenance costs on the premises, business insurance/s, business rates etc.
- Local Council Charges
Your local authority charges for services such as waste collection, these can add an extremely large cost to your budget and can make your new location more or less desirable.
- Business Rates
These are taxes on business property to help pay for local council services. They tend to be based on the property and don't reflect the turnover or profits of your business. Contact the local Council for a full list of payable rates.
Do you require new or updated licenses to trade in the new location?
- Body Corporate Fees
These are formed by the owners of a piece of land and subdivided among the residents to manage and are now known as Owners Corporation. The fees help to maintain the common areas such as stairwells, lobby’s, lifts and car parks. For freehold property ownership and large mixed-up projects, the Owner’s Corporation can engage a professional strata management or body corporate managed to manage the building on behalf of all owners.
The Owners Corporation must ensure they have public liability insurance cover and must have the building covered under an authorized damage policy that will replace or reinstate the building back to the original condition.
These are financed by a contribution paid by all owners, similar to a levy that is agreed to an AGM. There are two types; an administration fund which pays for day-to-day things like insurance premiums.
Some Owners Corporations require contribution to a sinking fund, which covers future capital expenses like driveway refurbishments, repainting, replacing carpets, overhauling the lift and repairing roofs.
The taxes and rates that may include the running of a physical property, you as the lessee are responsible for the payment of any outgoings unless provided within the leasing agreement, and which is recoverable within legislation.
As with all types of legislation, there are differences between each state however all states and territories have some sort of provision for outgoings, these may include;
- Land tax payable on the land on which a building, or centre is situated
- Expenditure of a capital nature, which includes the repayment of capital costs
- Contributions to a depreciation or sinking fund
- Insurance premiums for loss of profits
- Lessor's contributions to merchants' associations and centre promotions funds
- Payment of interest and charges on amounts borrowed by the lessor
- Another item prescribed by regulation
Outgoings can be paid by either calculation a base amount that is an annual projection which is the be paid proportionately during the same time as rent, with a final adjustment made at the end of the year, or outgoings can be paid in arrears once receipts are received by the lessee for the lessor.
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