Starting or expanding a business is an exciting milestone. What began as a small operation in a home office or garage often grows into something requiring more space – a proper office, workshop, or warehouse. Although this need for new premises is typically a sign of success, it also presents business owners with a range of considerations that many may need to familiarise themselves with.
While buying a commercial property in Scotland may seem similar to purchasing a home, the reality is that it comes with its own set of complexities: successfully navigating the commercial buying process could be crucial for the long-term success of your business.
Is it value for money?
One of the most important considerations when purchasing commercial property is making sure you get good value for your money. In order to achieve this, engage a chartered surveyor to obtain a professional valuation. They can assess whether the asking price is fair and in line with current market conditions.
Beyond the purchase price, it’s also worth considering other expenses like business rates, utility bills, insurance, and maintenance. Ensure your business can absorb these ongoing costs without jeopardising profitability. Similarly, if you’re scaling your business, will the property accommodate future growth, or will you outgrow it quickly? Paying slightly more for a property that can support expansion may be a wise long-term investment.
Is it practical for your needs?
Of course, the perfect property isn’t just about price, it also needs to work for your business operations. So be sure to check it has enough space for your current and future needs. Also consider its proximity to transport links, main roads, and parking availability. It should be accessible for customers, suppliers, and staff alike.
In addition, check the property has essential amenities like toilets, kitchens, and meeting rooms. Don’t assume every commercial property comes with these facilities – that isn’t always the case! Plus, if you rely on deliveries or heavy goods, ensure the property has suitable vehicle access points and loading bays.
Beware: A property that isn’t practical for your operations can quickly become a liability, even if it seems like a bargain at first glance.
Check the competition
Location is key, not just for practical reasons but also in terms of competition. For instance, are there other businesses nearby offering similar products or services? Opening your business next to established competitors could make it difficult to attract customers due to local market saturation. Yet, in contrast, some locations can offer opportunities for partnerships and collaborations with complementary businesses. Given these possibilities, it’s well worth conducting thorough market research to understand the competitive landscape before committing to a location.
Are you allowed to operate your business there?
Just because a property is available doesn’t mean you can run your business from it. There are often restrictions on what activities can be carried out. You should carefully review the terms of any title deeds and lease agreements to identify any restrictions. Some properties may have limitations on the types of business activities allowed or operating hours, for example.
Furthermore, certain types of businesses, such as those involving food preparation, chemicals, or heavy machinery, may require specific planning permission. There may also be restrictions on using any properties for purposes other than their designated use (e.g. retail, office, industrial). Operating outside of these specified uses could result in fines, or even legal action.
For peace of mind, consult with a solicitor who specialises in commercial property to ensure you have the necessary permissions – and that your intended use is compliant with local regulations.
Is the seller entitled to provide the property?
Although it may seem obvious, checking that the seller or landlord has the legal right to offer the property is critical. First and foremost, your solicitor will need to confirm that the seller owns the property and that there are no legal impediments, such as bankruptcy or liens, that could affect the sale.
Secondly, if the previous occupant vacated due to financial difficulties, it’s worth investigating why. Was it due to the property’s location, condition, or lack of foot traffic? These insights can help you avoid similar pitfalls.
Due diligence is essential
Above all, conduct thorough due diligence before making any commitments. This includes surveying the property, as doing so can reveal hidden issues like structural problems, damp, or outdated electrical systems. Also check for any environmental risks, such as flood plains or contamination, that could affect business operations or insurance premiums. Again, consult professionals such as a solicitor, surveyor, and accountant to ensure you’re making an informed decision from every angle.
Starting or expanding a business in Scotland can be an exciting journey, but it’s crucial to balance enthusiasm with caution. Commercial property represents a significant investment, and the wrong choice can have long-term consequences. Remember – the right property can be a catalyst for growth, while the wrong one can become a costly mistake. So take your time, seek professional advice, and choose wisely.
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John Roberts is a Partner and Director at Austin Lafferty Solicitors. John has been with the firm for almost 20 years, with experience in all areas of business law.
