If you have been looking for real estate for your business, you are on the right path — the commercial real estate market is incredibly lucrative. According to IBIS World, the market size of commercial real estate in the US is $1 trillion.
However, you need to approach this matter wisely and pay attention to a number of factors. For instance, decide whether you want to rent or purchase the property, where you want it to be located, what amenities it should have, and the estimated cost. If you think through all these details, you will be less likely to face problems in the future. A careful choice of business premises is a huge part of your business’s success, so take it seriously.
Now, let’s look closer at the main factors you need to consider when choosing commercial real estate.
Rent or Purchase
One of the main questions business owners ask themselves when choosing a property is whether they should rent or purchase it. In recent years, most businesses have shown a tendency to rent a property. It has become a global trend for a number of reasons. First, leasing property allows for more liquidity: there is no need to make a down payment, so less of your money is tied up. Second, leasing is much more flexible. It is easier to qualify for a lease than for a commercial real estate loan, and there are more real estate options. Finally, the monthly cost is fixed, so you know what to expect and can manage your budget easier.
Leasing property makes your business more mobile and flexible. You can relocate faster to a new property if there is a need for a bigger space. However, there are some exceptions as well. Sometimes, you may be lucky enough to find a good option that is worth buying in the city center, or your business has strict conditions for the property — and you have finally found it. Don’t miss a chance if you have it.
If you have been struggling with property search, contact a company that can help you with that, such as Luxury Vienna. Luxury Vienna provides real estate both for sale and for rent and makes it easier for business to find their perfect commercial space. No matter whether you choose to rent or to buy it, Luxury Vienna can find real estate that will meet all your requirements.
Location
The location of your business premises plays a huge role in your company’s success. Before choosing real estate, think about your client: where do they live? Where do they go? Will they be willing to travel to a different part of the city for you? Once you answer all these questions, you will be able to decide where to buy or rent your commercial space.
Perhaps, it is worth considering the smaller and quieter neighborhoods of the city if you are a startup business. For example, if you want to open a cafe, keep in mind that there are many well-established competitors in the city center, and people will be less likely to choose your place. Thus, you will need to work hard to attract new clients and devise creative marketing campaigns. Research the area you want to run a business in and find what it lacks that you have to offer.
What to Pay Attention to
Let’s say you have found what seems to be the perfect space in a great location. What should you consider next? Pay attention to its condition. Can you use it right away, or are you supposed to completely renovate it? Does it have all essential utilities such as power, water, and drainage? Parking is also an important factor because you should have enough parking lots for your customers and employees. When looking for a commercial space, describe all the details you are looking for. For example, you may need a separate entrance, sound insulation, or a detached building. If you have issues finding a suitable space, contact professionals for help.
Documents and Budget
Before renting a business property, you need to do some research and estimate the approximate costs of rent, renovation, and other expenses. First of all, look at the vacant properties in your area. Most of them will have an average price per square foot.
Here is how to calculate your approximate monthly rent:
Rent = area × rate
You also need to assess the average ratio of the property price to the profit turnover to figure out the estimated cost of business premises. If you plan on opening a cafe, it will cost 15-20% of turnover. For a grocery store, it is around 3-5%, and for non-food stores — 8-10%.
To calculate the percentage, divide your annual rent by your anticipated revenue. The acceptable percentage depends on the type of business you are running. For example, for a law firm, a 15% ratio is acceptable, yet for a retail store, it is safer to stick to 5-10%.
Furthermore, when selecting a commercial space, it is better to enlist the help of lawyers. It is a safer option than doing it yourself because the lawyers will help you deal with all the documentation and assess the possible risks. They will be responsible for taking care of the Sale Deed, the Mother Deed (the parent document), and the tax documents. Commercial real estate lawyers will handle the transactions associated with your property, so you will be able to focus on other aspects of your business.
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