Commercial real estate in Randburg as an investment can provide great returns, but it can also cause some serious headaches if you do not do your homework and go into the deal with your eyes wide open. Commercial property can include residential multiplexes and apartment complexes as well as more traditional business and warehouse buildings. Whether you are buying commercial real estate for profit or simply to house your own company, before you buy you should do all you can to avoid the following common pitfalls.
Have a Thorough Title Search of [tag]
Before making any commercial real estate lease, whether it is residential or commercial it is essential to get a complete title search to identify any liens or other problems with the title. The [tag] is basically the history of the deed changing hands and whether or not there are any unresolved claims to the deed by previous lenders or contractors.
Renting a warehouse (or a portion of a warehouse) on a contract basis may be the best choice for your storage needs. Contract warehouses are perfect for storing large items or a considerable number of items, especially those that will need to be protected. Normal storage facilities can’t offer the protection and the amount of space that a warehouse can provide. You can rent warehouse space or commercial property for short-term storage needs, or for long-term storage and distribution.
Renting warehouse space on a short-term basis is perfect for when you are trying to get your small business off the ground. You know you’ll need a place to store and distribute items, and using your basement or garage just isn’t going to cut it. A small business won’t need the vast amount of space of an entire warehouse, and conversely, will need more space than what a household garage can provide.
How Do you Select the Best Commercial Property for in Randburg?
A major tool for businesses, especially within the last two decades, is outsourcing. Your company may outsource many services formerly done by internal departments and employees. While many people think of manufacturing and payroll as the major departments that are routinely outsourced, there is one that may surprise you: Warehousing.
Outsourcing your warehousing may be a necessity for your company, especially if you're a company on the East Coast that needs to efficiently get your products to the West Coast, or vice-versa. Renting warehouse space on the opposite end of the country to house your products is a form of outsourcing. Your company will operate more smoothly and save you money when you implement third-party logistics for your shipping, receiving and storage.
You will want to consider leasing a warehouse that will allow you to keep in touch with your inventory. Some warehouses have very high-tech logistics software that will allow you to track your inventory from over the Internet. This will give you the power to track and check your inventory yourself, rather than calling an operator and being put on hold while someone else checks for you.
Third party logistics is an ever-growing trend in the warehousing business. Make sure you choose the right warehouse for your company by researching the building's convenience, staff and amenities.
Trying to understand commercial property lease terms can seem like navigating a mine field - there is plenty of new terminology and industry jargon to comprehend. When it comes to negotiating, some landlords may try to pass off a lease document as "a standard lease" that all tenants must sign. In many instances, unknowledgeable tenants could end up agreeing to terms that are less than favourable - which are in fact not standard policy. Be wary of the following clauses:
- Early Termination - this clause often allows landlords to terminate the lease early and reasons for the early termination may or may not be given. Resist the inclusion of such clauses in your negotiations.
- Default - be wary of onerous clauses that allow a landlord to evict a tenant if the rent has not been paid within a week of the due date. While it may seem standard, it is more typical for leases to stipulate written notice be given to tenants at least 14 days before any consequences are enacted. Negotiate for required written notice in the case of default.
- Redevelopment - try to avoid redevelopment clauses that allow a landlord to terminate the lease in order to redevelop or renovate the premises.
- Indemnity - be aware of indemnity clauses that indemnify the landlord against claims for loss or accidental damage by the landlord. Be sure to check your insurance policy to see if an indemnity clause on your commercial property could violate your policy.
- Handover dates - the handover date is the date the premises are turned over to the tenant to begin the installation of fit-outs, before the fixed commencement date of the lease. Avoid leases that allow a landlord to alter the handover date without compensation - as you could find yourself incurring substantial costs if you are delayed or caught unprepared for fit-out construction.
- Make good - a make good clause generally requires the tenant to leave the premises in good condition upon departure. This usually includes the removal of any fit-outs that were installed by the tenant during the term. If your premises come installed with fit-outs, negotiate to alter the "make good" clause to a general expectation to leave the premises in good condition and repair.
There are plenty of other clauses and terms that can be negotiated - from who is responsible for whose legal fees as well as any upkeep, repair and maintenance costs. Many businesses will find that they have much more success negotiating lease terms to help reduce their costs rather than trying to get a landlord to come down on price. A tenant broker service can help with the lease "legalese" - they'll help you get a better understanding of what your options are.
Leasing is a major part of the commercial real estate market activity at the moment and for the immediate 24 months. This is due to the opportunity of lower rental and better premises for existing businesses. Some businesses are handling the economic pressures in this market just fine. These businesses are the ones that you want to be closely working with as they seek to relocate to better premises.
The high value you bring to landlords in this market is your ability to tap into a significant data base resource of tenants. Every day you should be tapping into your database and adding more businesses to it. Those agents that are doing this at the moment are the ones that are earning the good commissions.
Tapping into Tenants Needs
When working with or for prospective tenants to find them new space to occupy, it is useful to compare buildings in a logical and material way. Some agents choose to specialise in leasing commercial space and comparing buildings is undertaken as a standard part of the professional services provided.
It is useful if you create a checklist for the process of property comparison. An excel spreadsheet is ideal for the purpose. The quality of your checklist will test and support your skill in judging property functionality for the tenant in both tangible and intangible ways. Ordinary agents and brokers do this in only a superficial way and with little attention to the process or to detail.
Your Point of Property Difference?
So this process can be a distinct part of your commercial property leasing services and if done in conjunction with the tenant, will show your complete understanding of what the tenant needs. Compiled in a correct way it can build tenant confidence in your services and strengthen future ties or repeat business. So let's now look at what you can put in your 'Property Comparison Matrix'.
The comparisons are to be made property to property. The data is entered into the columns of a spreadsheet. These headings below should be the columns of your spreadsheet.
- Rent: this is the rent required to be paid in the first year of the lease. How does it compare to the market and other properties around?
- Rent review profile: this is the escalation profile of rental over the term of the lease. Rent reviews are to be done in different ways and you need to know how they may impact the landlord or the tenant (it does depend on who you are acting for as to your interpretation)
- Incentives available: this is the type of incentive that can be given in the lease deal and its relevance to the tenant at the start of the lease. Is it in the form of a rent reduction, rent free period, fitout fund, or provided established existing fitout? There are advantages and disadvantages to be assessed in each case.
- Term of lease: the term of the lease that the tenant can achieve in the property is important and will be a fundamental factor for them to consider. How flexible is the landlord in giving the tenant a longer occupancy if required?
- Option available: some tenants need an option to occupy the space for an extended time. If this can be provided by the landlord it will be a selling point for the new lease. Care must be exercised in how the rent will be set in the new lease term of the option.
- Lease deposit: this is the amount of deposit required by the landlord for the premises. The amount of money is usually one month's rent paid in advance.
- Rental guarantee: this is the type of guarantee required by the landlord as part of lease acceptance. It is common for guarantees to be either cash, directors or personal guarantees or bank guarantees. The amount sought by the landlord will vary.
- Moving or relocation costs: every property will present differences in moving costs. This can be due to the distances involved in the relocation and or the physical attributes of the property to which they locate.
- Floor coverings, wall treatments, and window treatments: all of these are both cosmetic and functional for the new occupancy. The quality of these should be a commercial standard. Some landlords may choose to take the cheaper option with the cheaper products which will deteriorate quickly during the term of the lease. Commercial grade materials are desirable at all times. This should also be enforced on the tenant when they consider their individual fit out construction.
- Existing fitout: It could be that the potential new property that the tenant is considering has some established fitout which is useable in the new occupation. This will be a cost advantage for the tenant in minimising its costs of new fitout.
- Storage: with today's modern business, it is a great advantage to have storage capabilities onsite for the use of tenants. Typically these areas can be in car park locations, plant rooms, and service areas that are not frequented by tenants or members of the public. Obviously the areas need to be secured and in doing so a rental will be charged to the tenants for the use of the space.
- Signage: many tenants require a business presence that is identified by exterior signs. This can be signs on the exterior of the building, pylon signs, and directory board signage. In most cases, rental is charged for signage. It is the importance of the signage and the buildings ability to provide it that will be relevant to the tenant.
- Car parking: the availability of onsite parking is important to many tenants today for both staff and or customers. Car parking should be separately charged to the tenant given the number of spaces that they require. The availability of car parking and the number of car parks available will influence the tenant in their future occupancy decision.
- Expansion space: many tenants need to know that expansion space can be achieved in the premises as time proceeds. This should be looked at and assessed in case it is of interest to the tenant.
- History of the building: some tenants and like to know that they are located in buildings that have an established presence and performance. Any history of the building will be of interest to the tenant.
- Quality of ownership: well established landlords with a history of quality building performance will influence a tenant in their occupancy decision. Gather whatever information you can regards the landlord's track record in building performance. It will also be interesting for the tenant to know if the landlord regards the building as a long term holding or short term investment.
- Quality of maintenance: it is easy to see if the building is well maintained from its general appearance. Experienced landlords will spend money on cosmetic upgrades regularly so that the building gives a first class appearance at all times. This then supports the rental in any new lease and the ability to escalate rental over time. Help the tenant and the landlord understand this critical component of ongoing occupation.
So the above list of topics help you create a substantial checklist that you can use with tenants and landlords. Importantly you can now compare properties for the advantages and relevance that they bring the tenant.
Business Properties Do Randburg PromotionS