5 Potential Mistakes When Purchasing A Commercial Property

1. The decision to purchase a commercial property should ideally be made based on an investment strategy such as capital growth or income generation (rental return), or be a strategic purchase for a business (such as relocating to more favourable premises). So the first potential mistake when purchasing a commercial property is to make a decision to buy based on you simply liking the property, or believing that it is a good deal, and failing to use facts to determine if it is the right fit for your investment strategy.

The next 4 potential mistakes are related to failing to determine the facts. They occur when an investor fails to complete ‘due diligence’, thorough investigations, to help inform whether the property is a good investment, or whether it will suit their requirements.

2. To know whether you truly are getting a good deal you need to get to know the commercial property market in the area for comparison. Failing to find out what the local commercial property vacancy rates are, the average rents, flood areas, or local regulations could be a costly mistake when you are purchasing a commercial property.

3. Once you have found a commercial property that you are considering purchasing you may have ideas about the type of tenants that you wish to attract. It is important to consider if the property is in an appropriate location and is suitable in terms of volume of passing trade, parking, access to the property, and easy access to public transport. Not considering the location, local population needs, and future local infrastructure developments could be mistakes that leave you with an empty property if businesses are unable to thrive in your commercial property.

4. It is important to get a full professional survey on any commercial property before purchasing. Buildings that are in a poor state of repair or have issues with services, such as broken boilers/lifts/plumbing etc., could generate unexpected large expenses that make the property a bad investment. It would also be a mistake to fail to ensure that the premises comply with building regulations and any other national or local regulations.

5. It could be a mistake to purchase a commercial property which already has struggling tenants, or where nearby developments or infrastructure changes could cause businesses issues in the near future (for example if a shopping centre or large successful competitor is due to open nearby). It is important to conduct credit checks, to ensure tenants will have the ability to pay rent over the long term, as well as to check there are no issues in existing leases.

Our helpful and experienced team are available to assist with any questions you may have, to conduct searches, or to check lease agreements. Simply give us a call on Bradford 01274 735511, Ilkley 01943 601173 or Bingley 01274 723858, and we will arrange a convenient time to discuss your requirements.