With the growth in investment and development throughout Worcestershire and the West Midlands over the last decade, the commercial property market has met increasing demands and pressures from businesses seeking new premises to meet the changing needs of their organisations.
John Dillon of GJS Dillon identifies reasons for businesses to seek new property. These can be varied – most obviously to enable businesses to expand their operations (or contract to reduce operational costs), but also to reflect changes in the underlying nature of their businesses requiring a different type of property and, as we often see, an increasing demand for high quality working environments driven by a competitive recruitment market.
Moving premises is a disruptive and potentially difficult time for any organisation but this is more so when major considerations in the acquisition process are overlooked, namely: identifying needs, timescales, exit of existing premises, availability of property and budget.
John offers some simple advice on acquiring new commercial premises:
It may sound basic but numerous commercial property enquiries are made by companies wishing to move who have not at the outset considered fundamental details such as the size or nature of the property they require.
It is important to get the specification right, as most businesses do not relocate often it is therefore essential to get the premises right first time. John suggests this can begin with a space audit, which determines the floor space requirements of the business and how the various facets of the company work together, in order to arrive at the building envelope for the new premises.
It is also important for businesses to seriously consider whether to buy or rent, since there are considerations on both sides of the buy/lease equation, ranging from flexibility and capital commitment through to tax breaks and financial incentives available to help cut the cost of the move.
It is vital to be realistic about timescales and to leave enough time for any contingency. If the chosen premises are new-build or being purpose-built for example, it can often take between nine months and two years for the development to reach completion.
Furthermore furniture, equipment, plant and utilities, which are essential to the operation of the business, can also be subject to longer order lead-times than anticipated.
Consideration must be given to the ease with which the business can vacate its existing property. For example; what are the conditions of any lease held and the requirements for notices and liabilities for dilapidations, and what are the market considerations governing how long it will take to assign or sell any existing premises?
It is important to factor any exit costs incurred, such as lease break penalties, and dilapidations/repair costs; all forming part of the balance. In this vein, legal formalities must always be complied with and legal or surveyor’s advice should be sought if there is any uncertainty about these.
Availability of property
Despite the sea of agents in some commercial and industrial areas, it often comes as a surprise to businesses just how few of the available properties meet a business’s specific needs.
John Dillon approaches this hurdle by determining the general locations or specific buildings that his clients feel will meet their needs and investigates whether there is scope for negotiation to secure premises ‘off market’, as well as the available accommodation.
As always in business, it is vital to be realistic about budget and to consider every potential cost of the move. For example, it is time wasted to consider premises if they will ultimately be too expensive to occupy or fit out and run the risk of losing out on premises that are ‘the perfect fit’ – in all respects.
Ultimately businesses needs to be able to relocate to the right premises, achieve best value for money, meeting the required timescale with the end goal of achieving minimum disruption to operations and making a smooth transition to enable a business to continue its growth.