The Challenges Faced by Smaller Companies When Acquiring Commercial Property

The Challenges Faced by Smaller Companies When Acquiring Commercial Property

The BBC has recently reported that smaller companies here in the UK are not receiving the funding required to grow to a global size.

Funding has, for some time, been an issue within the UK as many investors look to dispose of their share of a business well before it can grow to the size of a Google or an Uber.

It has been suggested that one of the main reasons for this is that tax breaks available to investors are only a benefit if the investor exits when the company is smaller. Investors are essentially incentivised to exit from an investment earlier than they would do if they were based elsewhere around the globe.

This highlighted to me one of the many challenges that small businesses face in modern times. Acquiring commercial property is another example of these challenges and can be a stressful process throughout. This is especially true in a buoyant market where availability is low and prices and rents are rising.

Inexperience

Many occupiers rely solely on themselves or one of their colleagues/employees to acquire commercial property on behalf of the company. This usually involves someone who has limited experience in identifying the type of property that is required - which can result in a number of issues being missed.

If the wrong type of property is sought then the company could not only acquire a property that does not suit their requirements but they could also be faced with a liability they are unable to dispose of, especially if they pay too much or commit to unattractive lease terms.

Seek Advice

The solution is to take advice from a commercial property professional / chartered surveyors , ideally before the search for a new premises starts. They will be able to advise on the nature of the property that will be most suitable for the business as well as lease terms which reflect a company's specific operational requirements.

As an example, if the company is growing, flexibility needs to be built into the lease agreement to account for expanding operations and needs.

Other pitfalls associated with occupying commercial property could be missed if advice is not taken on such things as lease break clauses, rent free periods or other inducements, schedules of condition to avoid substantial dilapidations, liabilities at lease expiry, etc. Good advice is never expensive, and the rewards of speaking with a professional prior to this process will far outweigh the expense incurred should your acquisition of property go wrong.

For further advice regarding the acquisition of commercial property, please contact one of the agency teams at any of our four offices (Peterborough, Huntingdon, Cambridge and Bury St. Edmunds).

We are able to advise on all property matters across these locations and the surrounding areas. Alternatively, give us a call here at Peterborough on 01733 897722.