Should You Invest in Business Property?

Alan speaks to Ashley Dabson who runs the Property Management Course at Henley Business School to discuss what you should think about when investing in a business property.

Note: This transcription has been generated with AI and there may be errors present. 

 

You’ve started trading, you’ve grown your business, you’ve made some money, things are going quite well. And you’ve got to the stage where you’re thinking about property. Where do you take your business next, where’s the home of your business? My name is Alan Donegan. I’m from the pop up business school and I’m here with Ashley dapsone. From Henley Business School, who runs the property management course there. And actually, we’re actually at this stage right now, where we’ve been doing pop up events for about six years, we’ve got a good solid base, we’ve got some cash in the bank, and we’re thinking about taking on a permanent venue. Right? And it’s a big step. And I’m sure quite a lot of our audience have thought about permanent venues. So when you’re thinking about getting that space, what should we think about?

Well, there’s a lot of things to think about. I’m sure. Location, Location could be critical in all sorts of ways from, from a business perspective, from suppliers, from customers, getting to you footfall, whatever it is, I would put that as number one, I would, then the sizing of your space, what do you actually need? I put that as probably number two. So what you’re really talking about is where, and what, as the first one, you beyond that, it starts to then get into much more detail. And then you are into the the type of accommodation you want, what impact do you want on your customer base or client base? All of those sort of things? And then the lease? And I’m assuming it’ll be a lease, no, no, no, you’re not buying a freehold. And the key here, and I can’t stress this enough, is do your homework, due diligence is crucial. You need to make sure you fully understand what your commitments are, what you’re informed, it’s not just the case of what rent you’re paying, it’s all sorts of things like rent reviews, basically, how long does the term of the lease how long you’re going to be committed for? Do you want to be committed for very long or do one, just one or two years something, something finished

a little challenge? If you’re taking on a 10 year lease? How do you know what?

Well, the other problem you don’t, you really don’t. And the problem you have is that when you try and reduce the term, you will tend to find that the rents rise. You know, landlords have an issue of voids, they worry about that. And one of the things they want to make sure about is that they get their rent, rent. And I think the key thing here is you can expect to pay more for that flexibility. My advice, it’s probably worth it. And it depends on the business. Again, it depends on the level of investment you’re putting into it, certainly for manufacturing and things like that, then you may want longer terms because the amount of investment in there, and various other uses. But generally, keep it short, it agility, don’t lose your freedom to change your freedom to react to the market. Because of real estate. It’s really my advice on the leases, so if I could just continue with that a bit. You need to look at things like service charges, you’re repairing liabilities, you’re insuring liabilities, your car parking and the arrangements. There is and of course the building itself. You know what risks are in terms of the services in the building, and what you are responsible for and what the landlord is responsible for. You should also remember that there are plenty of arguments over things like rent views, things like service charges. So you might want to look at what sort of relationship are you likely to have with your landlord? Is it collaborative? Is it supportive, that can make a difference? But don’t forget landlords can sell their investments. What you start with you may not only

may not get a lot of risk. So what’s the one biggest piece of advice you would give to someone thinking of taking a business property,

keep it short, keep

it flexible?

Keep it short, keep it flexible.