7 June 2019/ Tenant Guide

Guide to renting commercial property

Whether you’re a retailer looking for a store, or a professional service needing new or expanded office space, renting commercial property is a complex business.

As with most things, planning and preparation are the vital factors. There is a lot to get to grips with, and a litany of terms, laws, codes and customs to be aware of, before you commit to a property. The more you have in mind at the start, the more stress you can take out of the process.

Our useful guide gives you an overview of the key issues, from negotiating a lease to finding the perfect space.

Requirements

 

The first thing for any prospective business occupier to think about is precisely what their requirements are.

If you’re a retailer you have to be conscious of how many staff you have and how much this is likely to grow over time. The type of business you’re in, whether it’s clothes retailing or serving sandwiches, will naturally dictate how much storage, food preparation or office space you need within the shop.

For office occupiers much of the decision-making revolves around your staffing levels, and what sort of layout you want. But it’s also important that you bear in mind staff recruitment and retention – more so than in retailing, the look and feel of an office, and how modern it is, have a big impact on how attractive a company is to future employees.

 

Location

 

It’s the oldest rule in property, but also the truest.

Retailers need to be in the spotlight, in a prominent position with lots of footfall. Office occupiers need to be as close to transport links, amenities and local services as they can. But in each case, the more ideal the location, generally, the more you have to pay for it.

There are also other costs that might not be so obvious – big cities often have congestion charges, varying parking rates, and local by-laws and systems that you need to know about. And there are often local solutions, such as subsidised public transport, park and ride schemes etc., which will affect your day-to-day working life.

Budget

 

Fundamentally the decision about what requirements you can satisfy, and the location that you can go for, come down to what you can afford. These are the biggest considerations in terms of the budget, but by no means the only ones.

Because it isn’t just rent you have to fork out for with a property. There’s the vexed question of business rates, which can be almost as high as rent in some cases. Then there are service charges, and other costs that landlords will often demand you pay as part of your occupancy, whether it’s a retail or office lease.

Also be aware that unlike rents for most residential leases, commercial rents are paid quarterly, on four fixed dates for all tenants: March 25th, June 24th, September 20th and December 25th.

Lease negotiation - landlord

 

Commercial property leases are far more complex than those of residential buildings, because there are a lot more things that need establishing about the relationship with a landlord.

Commercial properties, especially retail stores, tend to suffer far more wear-and-tear, and landlords will try to avoid paying for repairs and maintenance wherever they can. So it’s essential that you look in detail at the lease to see who is liable for what, and whether this can be negotiated.

This is where going to a professional really pays off. Even though this can be a big expense, a surveyor or solicitor might save you far more in the long run. Also look to the lease to establish exactly what the rules are, in terms of a break clause – in the event that you need to get out of a contract early – how often the rent is reviewed, and what type of rent-free periods, if any, are on offer.

Another big expense if you’re not careful is the cost of getting the building up to scratch in terms of energy performance. All commercial property is required to have an up-to-date Energy Performance Certificate (EPC), but there can often be disputes over who pays for this – the landlord or the tenant.

Research

 

Overriding all of this is the need to be fully informed at all times. In the modern era tenants have more of an upper hand than ever before, thanks to the wealth of data online. The Realla search portal is a powerful tool that does more than just help you find the perfect office, shop or industrial site – it is a vast resource of vital data on individual properties, neighbourhoods and whole cities, backed up with detailed local market insights and data pages.

And there are numerous sites packed with advice and support when it comes to renting commercial property, including:

The Federation of Small Businesses - www.fsb.org.uk

The Royal Institution of Chartered Surveyors - www.rics.org

British Retail Consortium - www.brc.org.uk

British Council for Offices - www.bco.org.uk

British Property Federation - www.bpf.org.uk