While inspecting a residential property is generally based on emotions and the ability to picture a family living in the home, when looking to purchase a commercial property, it’s all about the end goal – how much can I make on this investment? Commercial property is about practicality, usefulness, and versatility. As a landlord, you don’t want to pigeonhole the property to only suit one type of business. So the ability of tenants to change and adapt the space is crucial.
But what should you be looking for when inspecting commercial properties? And when you find the perfect space, what are the next steps?
Details to consider
A commercial space is going to be someone’s place of business. Whether it’s an industrial space used for a warehouse or an office space filled with desks, it still needs to be presentable to visitors. So there are some things you need to consider to ensure your property is desirable for tenants.
- Natural light – People spend most of their waking hours at work, so natural light is important. If there is not enough sunlight streaming in, a space can start to feel claustrophobic and much smaller than it actually is.
- Configuration – Each potential tenant is going to look at the space in a different way, because chances are they’ll be personalising it for their own use. Key considerations include where the bathroom is located in terms of privacy and odour control and whether the layout is flexible enough so that if partitions are constructed, the lighting and space will be still be suitable.
- It can be cleaned – Just because a property is a bit dirty when you inspect it, doesn’t mean you should discount it straight away. Remember, anything can be cleaned. And if it needs some slight touch-ups or renovations that can happen as well. Cosmetic changes, such as a coat of paint or new carpets can be simple and cheap to implement.
- Utilities – Remember, someone is going to be using this space as their office or industrial space, so the utilities need to be in top shape. This includes water and electricity, which of course, is imperative to any business. You should also consider whether heating and air conditioning is already installed and if it’s not, what the cost would be. Very few businesses are going to rent a space without heating and cooling systems.
- Security and accessibility – Whether it’s for industrial or office use, there’s likely to be a lot of expensive equipment in a commercial space, including machinery and computers. For many tenants, the ability to securely lock the place at night will be a big factor in choosing your property. Potential tenants will also probably be assessing how they will get their equipment in and out of the building so having good access points is helpful.
- Surroundings – Yes, the building is the most important component, but the surrounds are also a consideration that should be taken into account. There may be outdoor areas that may increase your maintenance costs, or there may be balconies, awnings, or patios that may require repairs. On top of this, what is actually around the property? For many tenants, they may want something that has some shops or other businesses around so it doesn’t feel so isolated. It also means their employees have the opportunity to get out and about during lunch hours rather than being stuck inside.
Pre-purchase building inspections
Any decision to purchase a property should come hand-in-hand with building inspections. This is especially important with a commercial property. While cosmetic issues are important, the structure of the building is much more significant.
The general consensus is to check for structural issues. There can be safety issues and concerns so having a structural inspection is an absolute must. A structural weakness can cause a collapse that can in turn cause an injury, which is obviously a large problem. There also may be some structural issues that cannot be repaired at all, or without major construction that you may not have the finances or the desire to complete, so knowing about these will generally mean you don’t enter into the contract to purchase, saving you a lot of money and heartache.
The structural inspection should include a check on the electrical situation. Electrics are key when it comes to running any part of a business so ensuring the wiring is up to scratch is crucial. Faulty electrical wiring can spell disaster and can be exceptionally dangerous.
Prior to purchase
There are plenty of other things you should do prior to signing a contract. On top of checking out the surrounding areas, it’s also wise to check out the surrounding properties, especially those that are similar to the one you are considering. This will give you an idea of what tenants expect and what other landlords are receiving in rent. Research the area and the market thoroughly so you can ensure you get the best bang for your buck.