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10 things to know: when choosing commercial space for your business

10 things to know: when choosing commercial space for your business

Having to invest in a commercial space is like making a new deal altogether. More specifically to run your business, choosing the right commercial property is considered as a cost-effective decision. For any investor, careful planning and research is a mandatory step to make a sound investment decision.

Here are 10 things to keep in mind before purchasing a commercial real estate.

  1. Location as per your business type- A business should be strategically located in a way which will provide returns through two avenues – rent and capital appreciation. Location is everything. Any business in a prime location will be a best choice for retail or office. Besides this, it is easier to get loans for such commercial properties in major areas.
  2. Connectivity & neighborhood- This factor is of utmost importance. A property is considered as a right commercial space only when it is easily connected to other major areas. If your locality has food joints, shopping mall and centres nearby then people are likely to visit the place more often. Easy connectivity to other areas such as railway stations, or airport also highlights the location.
  3. Infrastructure development- Similar to location and neighborhood, availability of basic utilities like electricity, water & drainage, and amenities like WiFi connectivity, washroom, CCTV surveillance, 24x7 power backup facility, parking, security etc greatly affects the value of your property.
  4. Physical aspects of the property- It is essential to know about the wear and tear condition of the property. It will give a clear idea on how and for what purpose a property was used before and what kind of repair facilities are required to maintain it. Additionally, it would help to understand about the resale value or rent that could be earned in the near future.
  5. Deciding budget- Investment means budget plan. A commercial property purchase transaction is also very important for an investor. While buying a commercial property it involves a down payment of 20 to 25% of the total amount of final price. If an investor is not able to lay down the budget allocation then maybe it is not the right time to buy that real estate.
  6. Right tenants- If you’re planning to rent a commercial space, opt for good tenants or renowned tenants & avoid unknown companies as it will significantly increase the value of your commercial space. Good tenants always tend to pay on time and increase the value of the commercial real estate.
  7. Hidden Costs of the commercial property- These costs include running and maintenance costs of the property. In any case, these costs should be discussed in advance and estimated before coming in agreement with the contract itself.
  8. Potential to expand or lease out- A commercial real estate should be in a way that will provide an opportunity for expansion or lease out in the future.
  9. Purpose of the property- If a business is related to manufacturing or warehouse, that property should be allowable to industrial uses similarly for an IT sector it would need an office. It is vital to know about the lawful uses of a property before purchasing.  
  10. Free of litigations- A buyer must be aware if there is any old or existing litigation on the property. If at all there is any, an investor can get a chance to re-negotiate or terminate the contract.

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