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Considerations When Building a Commercial Property

December 14th 2018

Considerations When Building a Commercial Property

When you first started out, your business space was perfect - sleek appliances, a foolproof location, and an ideal amount of space and storage - but now it seems you've outgrown your premise.

Perhaps it's time to expand into an untouched market with a new location, or maybe you simply need some extra space and are considering an extension? If your business is booming, a brand new build may be on the cards.

Either way, there's a great deal to consider. Commercial real estate does not come cheap, and additional construction or extensions can require substantial capital and time investment. In addition, rules and regulations differ substantially compared to residential property, meaning that some modifications and builds may need additional planning approval.

If you're in the market for a new commercial property or looking to extend your existing premise, here some of the key factors that you need consider.

Put a Bulletproof Plan in Place

Whether you're renovating, extending, or building an office, the foundation of every commercial property project is a robust plan. Before embarking on any commercial building project, take the time to adequately research your legal obligations, perform background checks on contractors, and carefully estimate the project's cost and timeline. This will set your project up for success and prepare you for any unexpected issues down the line.

Long-term objectives should also play a crucial part in your plan. Commercial property should be built to accommodate future growth and remain flexible to changes in the market. It's therefore essential that you seek appropriate guidance from financial advisors, surveyors, architects, and interior designers to ensure you're making the right decision

Ensure you Obtain the Right Permits

In the UK, planning permission is required for almost all types of commercial "development" as defined within the Town and Country Planning Act 1990. This includes brand new constructions, demolitions, rebuilds, subdivisions and structural alterations, such as office extensions or changes to shop fronts and external security shutters. However, interior modifications and additional buildings within the boundaries of the original property, may not require planning permission.

Furthermore, UK legislation divides commercial property into 'Use Classes' that depict what the property can and can't be used for. If any building operation alters the primary use of the property, you will need to acquire planning permission to switch from one class to another, although there are some exceptions. For example, you can switch from a restaurant or cafe to a retail shop without any restrictions. However, it's always best to consult your local planning authority for confirmation before key decisions.

Planning applications must also be submitted to your local planning authority using the official forms. You can send the form yourself, or if the request looks too complicated, you can enlist a chartered surveyor to handle the application on your behalf. Either way, make sure you get onto this early. Minor applications are generally resolved within eight weeks, while major developments can take up to three months.

As of 2014, specific planning applications must also be accompanied by CIL documentation, which allows your local authority to determine whether you are liable for Community Infrastructure Levy (CIL) charges.

Adhere to Current UK Building Regulations

Commercial property in the UK needs to provide a safe environment for all people. Before, during and after construction, it is imperative that all UK Building Regulations are strictly adhered to. Necessary precautions must be taken to ensure the building complies with standards relating to:

  • Structure
  • Fire safety
  • Site preparation and resistance to contaminants and moisture:
  • Toxic substances
  • Resistance to sound
  • Ventilation
  • Sanitation, hot water safety and water efficiency
  • Drainage and waste disposal
  • Combustion appliances and fuel storage systems
  • Protection from falling, collision and impact
  • Conservation of fuel and power
  • Access to and use of buildings
  • Electrical safety
  • Security in dwellings
  • High-speed electronic communications networks
  • Material and workmanship

Choose Your Contractors Carefully

Enlisting the services of reputable trade professionals is vital to the success of your project. Therefore special care should be taken to thoroughly vet each contractor regarding technical competence, customer service, and good trading practices.

Commercial projects also need to be approached differently than residential as they sometimes require special skills or more specialised tradespeople. Depending on the complexity of the project, you may need to hire a project manager, architect, builder, engineer, electrician, plumber and more. It may seem daunting, but before rushing into any hires, save yourself time, money and stress by conducting proper background checks and asking for two to three recent examples of similar work. You can check the status of a contractor's registration on government-endorsed websites like Gas Safe Register and Competent Person Register, and confirm qualifications on trade association sites like TrustMark. Likewise, asking to see proof of qualifications such as an NVG in construction is completely acceptable.

It's also advised that you meet each contractor in person before hiring them. This gives you the opportunity to ask important questions, but also ascertain whether you feel comfortable communicating with them. Clear communication will be critical if any problems arise at a later date.

Secure Financing

It's likely you'll need some extra financial support to complete your planned construction. Of course, securing finance can be a daunting task. But, there are several options available to small business and generally speaking, the right option will depend on how much additional funding you need.

Credit Card

Small-scale extensions under £25,000 such as repairing an existing brick wall or adding a small storage room usually only require a company credit card. This provides access to funds immediately and allows you to start hiring relevant trades, or purchasing materials to get your project off the ground.

Bank Loan

Businesses looking to fund a significant construction such as developing an empty plot of land should consider a construction loan. Generally, you will be required to pay a large deposit and commit to a minimum term of approximately 15 years. A great place to start is your company's current financial institution. However, to secure the best rates, you may want to shop around using a government endorsed website like Better Business Finance.

Government Grants And Loans

If you can't get a loan from a bank or other mainstream provider, you may be able to receive a loan from the Department from Business, Energy & Industrial Strategy, particularly if your renovation will reduce carbon emissions or improve the exterior facade of your shop front. For example, growing businesses that have been successfully trading for 12 months or more in Sussex, Kent, Surrey, Hampshire and Essex can apply for a Business Growth Loan between £3,000 to £50,000. There are a range of other loans available for businesses across England, Scotland and Wales, including those that are not yet trading and start-ups with less than two years of trading.

Prepare an Accurate Budget

Preparing your budget is a tedious task. But, it's also essential to securing finance and setting your project up for success. By accurately estimating expenses and adjusting for unforeseen costs, you'll put yourself in a better position to maintain quality while ensuring you don't blow out your budget.

Meeting prospective builders onsite and providing them with all building plans can help them accurately predict labour and material costs. It's also a smart idea to retrieve at least three quotes per contractor and check out multiple suppliers to ensure you receive the best possible price without sacrificing quality.

Likewise, choose a reputable land surveyor that can accurately determine the geographical factors that could affect your budget, such as existing structures below the topsoil or the stability of the land. Commencing construction without enlisting the help of a qualified surveyor could be a costly mistake.

Lastly, always budget for potential problems by setting aside a contingency fund to cover any repairs, hidden fees or unexpected VAT. And don't forget insurance!

Source Quality Materials

As a business owner, you always want to put your best foot forward. Therefore, when it comes extending or building an office space, you should keep in mind that quality results require quality materials. Cutting corners by purchasing cheap materials can severely impact the stability, durability, and safety of your commercial property, ultimately driving the value down. Without doing your due diligence, you could end up with expensive repairs, in addition to a costly lawsuit.

Make sure you use reputable suppliers and ensure you purchase your materials conservatively, but purposefully. For example, you don't want to be waiting weeks for a new delivery to finish your project, but you also don't want to overdo it and order excessive materials that cost money and go to waste.

When extending, an important consideration is to match the materials to the existing structure. If you're adding to an existing masonry wall, a brick matching service can help ensure a seamless integration. Furthermore, selecting your bricks can be a tough decision and impact the overall aesthetics of your commercial property. Brickhunter offers a free brick selection service to ensure you choose the right brick for your project.

Are You Ready to Build?

Building a commercial property can be an exciting, but daunting, time for your business. It's a significant investment, and there's a great deal to consider. However, by arming yourself with knowledge, you can set your project up for success from the very start.