Advice on a commercial let of office space

[titanium]

What is the general procedure for getting a reasonably priced commercial let?

1) Price.
I am not in the UK at present so using internet only for research. Have tried various sites like zoopla and rightmove to get a general idea of prices, but 80% are POA and we are a long way off making a serious offer (looking at 18 months time-ish). So, any good sites for price comparison? Is office space normally charged by the square foot or by number of rooms etc?

2) Costs
Do you normally have to pay more than one month's rent upfront? Other hidden costs (solicitor's fees etc.?) What about service charges - what is an average for say 150-200 sq feet? What do you get for your money? Are rental contracts standardised & easy to understand or is it normal to have to get your own solicitor to check, if so, average cost? Is there usually an agency fee to pay if the let is found via an agency website?

3) Finding a let.
Instinct tells me these big internet sites are not the most economical way to go. Have tried Gumtree but they seem to be chocka with agents too. Is there another avenue?

4) Length of let.
Is this normally negotiable?

I am interested in comparing locations too. We are not sure where to set up - my mini short list is Worcester, Nottingham, Leeds, Oxford. Husband is considering London too (I'm not so sure).

Any input gratefully received!

 

[dmckellar]

I'm sure a lot of landlords issue repair and maintenance leases, which mean you are in charge of fixing any problems and keeping on top of the general wear and tear.

100% get a solicitor to look at the paperwork as commercial lets are a bit of a minefield compared to basic housing property

 

[vvaannmmaann]

18 months is a long way off to far away to make any predictions.Also we have a General Election next may That may change lots of things.

 

[titanium]

Appreciate that vvaannmmaaaan but I hate leaving things to the last minute lol!

 

[Talay]

You'll need plenty of time to do your research and help you to avoid a lemon but do not underestimate the benefit of being on the ground before making any decision.

Gumtree = fraud = avoid (most times)

At an outside, budget 6 months deposit, 3 months advance rent, 3 months to kit out and get ready (so another 3 months rent), £10k for surveyors and solicitors and other fees and a few grand for insurance and supplies, telephones, technology etc.

If you need to advertise, budget separately.

You will probably get cheaper but best to to conservative.

You could ask a surveyor for a copy report on a property in your key area as to rents for Zones, A, B, C, plus any storage etc. You will then be able to assess advertised rents.

 

[deniser]

What is the general procedure for getting a reasonably priced commercial let?

1) Price.
So, any good sites for price comparison? Is office space normally charged by the square foot or by number of rooms etc?

Office space is usually priced per square foot.
To get an idea of costs you need to look at the commercial agents' websites. There are some agents who are national and others who are local. You need to work out location first and then find the agents in that area. They are not always easy to find via the internet. The easiest way to find the local agents in a town is to look up at the to let boards - you will see the same boards over and over again and you can then look at the respective agents' websites.

Here is a link to one of the national agents (there are many). You should be able to see the size of the units and the price per square foot:

http://uk.officeproperty.dtz.com/property/search

Here is a link to a London agency specialising in offices www.monmouthdean.com/

There are really very many.

There's also the Estate Gazette magazine which may be worth getting hold of (unless you are looking for very small) and their website has property search on it too http://propertylink.estatesgazette.com/

I'm not aware of any price comparison sites - the sheer volume of property available would make this an impossible task.

2) Costs

Do you normally have to pay more than one month's rent upfront?

It is usual to pay a rent deposit which can by be anything up to 6 months rent depending on the lease term. An alternative to a rent deposit is to put up a personal guarantee but this is really inadvisable; a rent deposit is far preferable as your liability is capped.

Other hidden costs (solicitor's fees etc.?)

Yes - many costs - not so much hidden - just standard costs. Eg.

Solicitors' fees - your own and they may ask you to pay the Landlords too but you should resist this.
Survey fees
Stamp Duty (depending on lease amount and term)
Land registry fees (depends on lease length and whether there are rights over other property)

What about service charges - what is an average for say 150-200 sq feet?

There is no average. The older the building the more costly to maintain from a structural and fabric point of view. The newer the building the more gadgets and services it may have such as airconditioning, specialist wiring, intercoms etc, which will also be costly. Staff also cost money so if it is a block with a security guard, porter etc that will add to the cost. Gardens, exterior painting, listed buildings, garages, air con, shared amenities etc will all have to be paid for.

What do you get for your money?

What do you mean? The rent covers your use of the property.

Are rental contracts standardised & easy to understand or is it normal to have to get your own solicitor to check, if so, average cost?

No, they are not standardised, nor easy to understand unless you have legal training and they are full of pitfalls so you will definitely need a solicitor to check.

The cost depends on what sort of solictor you use - a city centre one is more expensive than one on a high street in a village. You get what you pay for though in terms of expertise...

Is there usually an agency fee to pay if the let is found via an agency website?

The Landlord normally pays the agency to find the tenant.

3) Finding a let.
Instinct tells me these big internet sites are not the most economical way to go. Have tried Gumtree but they seem to be chocka with agents too. Is there another avenue?

What size property are you looking for? All agents have an internet presence. Gumtree isn't the right sort of place.

4) Length of let.
Is this normally negotiable?

Yes

I am interested in comparing locations too. We are not sure where to set up - my mini short list is Worcester, Nottingham, Leeds, Oxford. Husband is considering London too (I'm not so sure).

What do you want to do at the offices? Is location important to your clients/customers?

London is going to be far more expensive than anywhere else, to live in as much as to rent in. Oxford is pretty pricey too. I imagine Worcester, Nottingham and Leeds will be relatively inexpensicve. Why the very random list of towns?

Any input gratefully received!

 

[titanium]

Thanks for the replies!
Talay - I nearly fell off my chair at the mention of 10k! We will be basically setting up in the UK what we have already set up here (and close down here). Naturally there are price/procedural differences between the UK and Bulgaria, which is why I'm asking the above questions, but when we set up here we found a rental through a mutual contact and were given 6 months free rent, then a heavily discounted rent for the next 6 months, paid monthly. We didn't use a solicitor, surveyor or agent and the landlord made the few structural changes we needed free of charge. I am fully aware that we were VERY lucky with that scenario, but compared to tonnes of up front charges and 10k fees for what is basically admin seems rather steep! Eeek.

We are basically looking at office space with 2 or more rooms (depending on price). We know we can set up in a week, not 3 months. We already own most of what we will need in terms of equipment.

It seems a bit over the top to me to have a surveyor for a bit of office space? Perhaps I am naive (most likely!) but is that strictly necessary?

All in all it seems a huge amount of outlay for a new company to pay out, before a penny has been earned....

Deniser - many thanks for the in depth answer!
I had no idea that stamp duty applies to rentals. Will investigate that.
Also land registry fees (does that apply only to property with land?)
Sorry, my question about what you get for you money referred to the service charge, not the rent itself, so you answered that already!

The offices will be for training. We will have small groups of students. Location is important in the sense that a centralised office will be better yes, but in terms of actual town, there are many possibilities.
Sorry the list sounds random! They are basically locations where we would have family relatively nearby/easy to access and which we know and like as places.

 

[Talay]

£10k isn't for admin though. A half decent solicitor isn't going to work for £50 an hour (mine range £250 to £500 an hour plus 20% VAT) so even a few hours racks up 4 figure (and 5 figure) bills fairly quickly.

A survey is advisable if your lease is insuring and repairing. You don't want to sign and then find you owe £50k for a new roof ! Remember, £15k a year over 10 years without a break clause is a liability of £150,000 !

I found the only way to come close to an accurate figure is to start with the premises cost and then extrapolate out to cover the advance rent, deposit, fees etc. and then start chopping away at costs one by one where you can.

I've set up an office overseas on a few hundred pounds but that is in third world countries. Come to the UK with real law and proper contracts and you get hit up with some unavoidable and some optional costs.

Just looking at the ones I am setting up now (not offices but retail) and the "extras" excluding any plant are just over £100k over a 6 month phased period of openings.

 

[rach88]

Have you thought about serviced offices - Regus etc? For the size of office you are looking for it might make sense. In serviced offices you can expect to pay an inclusive rent - no separate service charge, probably no responsibility for repairs, and a flexible agreement (easy in, easy out). The agreements are much simpler than a normal lease and you may not need a solicitor (though it's always advisable). Yes, it works out that you pay more per square foot but there are benefits.

As for hidden costs, don't forget about business rates, though you may qualify for small business relief.

 

[titanium]

I've not heard of that Rach88- another thing to look into, thanks!

 

[Talay]

Regus for long term use is not viable and as the OP hinted at location being paramount, a forced relocation might not be a good move.

However, Regus are anything but transparent on pricing and operate a multi tiered approach. For instance, near where I live, there are some low branded Regus offices. Their headline rates are 400% of the norm and multiples of what people can get elsewhere, their trading on their name essentially.

Also, like airlines and tier status, Regaus have tiers with more bells and whistles and lower pricing. Sometimes you can get access to these tiers through promotions directly but more often as part of a credit card deal, an airline perk, a collective arrangement or other third party alliance. All very useful if you know. If you don't have any affiliation, such as an industry or trade group, Regus can be very expensive.

What we have done is to look at where Regus (and others) are located and then make the presumption that as presumably Regus have gauged demand fairly well, that an enterprising local property owner will also be renting out flexible office space, without the Regus branding but at a fraction of the price.

 

[Christine Hough]

We rent an office with 3 rooms and it has not cost anything like this! But then it is in Hull and not London.
The lease only holds us for internal repairs and windows. The landlord is responsible for all outside including roofs. We are only renting one floor in a 4 story building.
It works very well. We signed a 6 yr lease with a break clause after 3 yrs, paid 3 months in advance and also got 3 months free (as it needed a fair amount of internal improvement) , so started paying rent monthly after 6 months.

We found it through a local estate office.

 

[titanium]

Thank you so much Christine! That is such a relief to hear! I was thinking there must be an alternative to what was suggested above or how would any new start up get off the ground.

 

[andygambles]

What kind of size office are you talking?

I'm in a building in Scarborough with offices at £600pm for 35sqm sizeable enough for 5/6 people with 100mbs internet. 20 day notice period and one month deposit.

Also have smaller offices at around £250pm for 16sqm.

This is in a building with receptionist and shared meeting spaces. Not a chance I'd be paying £10k fees!

There are also much larger units nearby. With the train station next door you are only 1:45 from London or 1hr from Leeds.

http://www.gladman.co.uk/offices-scarborough/

 

[deniser]

The offices will be for training. We will have small groups of students.

Be careful here. The use class which covers offices is B1. You need to make sure that this is the correct use for you because anything educational becomes D1. Are they your employees you are training or is the business training outsiders?

I do know people who have fallen foul of this and been served by an enforcement notice for running small classes from B1 premises.

 

[titanium]

Outsiders - so that would be D1. Thanks for the info!

 

[Christine Hough]

We had to get B1 and D1 for piano teaching.