Real Estate is a legal term that equates to a piece of land (including the air above it and the ground below it), and anything permanently affixed to it (such as fences, buildings, fittings and fixtures, improvements, roads, shrubs, trees, sewers, structures, utility systems and walls). Commercial real estate includes:

 

• retail property occupied by one or more tenants,

 

• office space (e.g. suburban high rise, medical office, central business district office), mixed use (combination of different types such as retail and office),

 

• health care (nursing homes, assisted living),

 

• hotels and motels,

 

• industrial (warehouse, manufacturing, research and development, light or heavy industrial),

 

• storage (self storage),

 

• specialty (gas stations, etc.)

 

Real Estate can be part of the asset allocation of a business as well as a benefit to the business (operating from own premises, depreciation of asset).

 

Acquiring commercial real estate (whether outright buying, renting, or leasing) will generally have more considerations than residential real estate. An important aspect is Term of Lease as it would be counter productive to move a business (and its customers) on a frequent basis.

 

Commercial liability, should someone be injured (physically or otherwise) on the premises, rests with the business rather than the owner of the real estate. Most agreements spell this out and often insurance coverage is checked to protect the Lessor.

 

Business premises should be chosen carefully. The rent or mortgage payments will form a major cost to your business and understanding and analysing your business requirements is paramount to success. Firstly you need to consider the best accommodation for your type of business. If professional you may need space that will be suitable for visiting clients. If manufacturing whether the space is adequate for all machinery and equipment to operate efficiently and safely. A Retail business needs a shop front that will be seen by passing trade and storage space for unpacked stock. A telemarketing company though, would be well sited on an upper floor of a building.

 

If you anticipate your business will grow in the next 3 to 5 years, this too should be taken into consideration to ensure there is sufficient space to accommodate extra staff and equipment in the future.

 

Good access and sufficient parking is important. The golden rule for a business is location, location, location it is no good having a caf in a suburban street where only next doors cat wanders past. However, if customers are unlikely to be visiting your business, somewhere outside the central business district in a business park may be the best option. Consideration also needs to be given to the security of the location both in terms of the employees and the assets of the business.

 

When acquiring real estate, a business must account for it, and often finance it as well. There are several steps involved in this process depending on the type of property or other acquisition. This will also vary from one jurisdiction, state, country to another.

 

When you buy or lease commercial premises you will need to employ a surveyor, a solicitor, an estate agent and mortgage broker. Using professionals will mitigate the risk of a bad purchase. Your business premises will become a business asset that could potentially increase in value. Leasing commercial premises also has advantages, such as not needing a large financial outlay, however there will be significant ongoing cost in rental payments to be met from the profits of the business even through difficult times. A Solicitor will give you the confidence of knowing exactly where you stand legally should difficulties arise.