By Jennifer Boynton, Associate in the specialist Commercial Property Team at Hay & Kilner
There comes a time in the lifespan of any expanding business where it begins to outgrow the space in which it is based.
This might be anywhere as basic as the kitchen table at which many well-known businesses have had their beginnings, or an office that no longer has enough desks for a growing team, or an industrial unit that doesn’t provide the space for the new production line that you’re planning.
Whatever the reason, identifying and securing the new space into which you’re going to move your operations is one of the most important decisions that a management team will make, as it will at least partially define the way in which the business grows for the foreseeable future.
Despite the prevailing challenges, this year has seen our commercial property team working on a steady flow of successful new lease agreements, most of which, encouragingly for the wider regional economy, involve clients taking on more space.
There are always a wide range of issues to consider when going through this process, but more so than ever before at the moment as we all navigate the aftershocks of the pandemic, the impact of which is continuing to have repercussions for the North East commercial property market.
There are particular sectors where reaching these agreements involves a bit more work than others, with clients in the leisure and hospitality sectors usually needing to make more of a detailed case to lenders to convince them that their business plans are robust.
If you need to bring in outside finance to help support your business’s plans, it’s essential that you take the time to gather as much management data as possible before approaching your lender or lenders of choice, so you’re in a position to answer any questions they might have about your plans before they ask them.
A proactive, organised client is much more attractive to a lender.
Getting this work done as early as possible also removes one potential reason for delays in securing and completing your new lease.
Your choice also needs to take into account more than just your short-term, immediate needs – if everything goes to plan, or better, you may find yourself needing more space than you’d first thought.
Giving yourself that extra bit of growing room at the beginning of the lease could mean you avoid the disruption of having to move again more quickly than you’d originally anticipated. You could even consider sub-letting additional space for a short period, if your landlord is agreeable to this.
Just like any commercial contract, the lease that you sign obviously needs careful examination from a qualified legal perspective. Issues like break clauses, annual rent increases and who has responsibility for the cost of maintaining the property while you’re occupying it need to be addressed and agreed before you put pen to paper.
Agreeing how and by when any work required on the property is going to be carried out and paid for is also an important consideration.
The North East offers a wide range of commercial space into which every type of ambitious businesses can move, and often at a costs that is the envy of other parts of the country.
Making sure that every part of your lease has been properly reviewed before you sign it will give you the peace of mind you need to get on with executing your growth plans and realising your business’s potential.