Understand your requirements

Before diving into the commercial property market, define your objectives. Are you looking for office space, retail units and shopping centres, hospitality, industrial properties or mixed-use developments?

Understanding the type of commercial property that aligns with your investment purposes and interests is crucial.

If you're considering owning commercial property, you and your advisers need to think about factors such as location, property value, initial costs, legal fees, capital spend and the potential for rental income.

Conduct thorough market research

Researching the commercial real estate market is essential. Examine current market trends, property types available, and economic growth indicators.

Websites, local council reports and consulting with established estate agents and other business owners can provide valuable insights into commercial buildings.

Location matters: evaluating the local area and transport links

Your chosen location plays a pivotal role in the success of your commercial property investment.

Assessing the local area, including demographics, footfall, and access to amenities, can help you determine long-term value.

Good transport links and adequate parking can significantly improve tenant appeal and business accessibility.

Properties near transit hubs and good public transport routes are often more desirable to owner occupiers and commercial tenants alike.

Choosing the right property type

The UK commercial property market offers a wide range of property types tailored to different business purposes.

Whether you’re considering retail space, factories, leisure facilities, specialist clinics or nursing homes, it’s important to align the property type with your operational needs and long-term strategy.

Many investors also look to invest in additional commercial premises for expansion or to generate rental income.

Mixed use buildings are increasingly popular, combining commercial and residential elements, offering diverse income streams and potential for both owner occupiers and investors.

They can range from shops with flats above to larger developments incorporating offices, retail, and residential units.

Financial planning and funding options

Determine your budget and explore financing options for potential commercial property transactions.

Similar to buying a residential property with a residential mortgage, as a high net worth individual you may seek a commercial mortgage to buy commercial property, or use existing funds to buy the property outright.

If immediate funds are needed for your initial investment, bridging loans can provide temporary financing.
Understanding current interest rates and how they affect your repayment schedule is essential.

Working with a dedicated team of finance professionals can help you choose the most suitable long-term finance options for your investment goals.

Consider the tax implications, such as stamp duty land tax (SDLT) and business rates.

You also need to factor in the ongoing costs of your commercial property such as mortgage payments, maintenance costs and insurance to ensure you have a profit-making asset.

Engage professional services

As an HNW investor, buying a commercial property involves various legal and technical aspects and additional fees, so engaging professional services is crucial.

An experienced property wealth guardian can help identify suitable properties and negotiate the purchase price.

A surveyor can assess the property’s condition and value. You will also need to seek legal advice.

Commercial property solicitors can assist with the legal requirements of the property market, including due diligence, lease agreements and the transfer deed.
Interior atrium of a modern glass office building

Due diligence process when purchasing commercial property

Conducting due diligence is critical to avoid potential pitfalls when buying commercial property.
This process includes:
●   Property searches: Verify the legal title through the land registry and check for any restrictions or encumbrances.
●   Planning permission: Ensure the property has the necessary town and country planning permissions for your intended use.
●   Environmental checks: Assess the environmental status and any potential liabilities.
●   Financial review: Evaluate the ongoing maintenance costs, mortgage repayments, and rental income potential.
●   Legal considerations: Review the sale contract, lease term and any existing lease agreements if the property is tenanted.

Due diligence should go beyond legal checks to include a review of additional costs and services required, such as building compliance, accessibility needs and waste management.

Seeking professional assistance during this stage gives you the confidence to proceed with a sound investment.

Making an offer and negotiating a commercial property purchase

Once you have identified a suitable business property and completed your due diligence, make a formal offer.
Negotiation is often required to agree on the purchase price. It’s important to remain firm yet flexible during this stage to achieve a favourable outcome.

Finalising the purchase

After agreeing on the terms, you will exchange contracts with the seller’s solicitor. This makes the deal legally binding.
At this stage, you will pay a deposit, usually around 10% of the purchase price.

Completion typically occurs within a few weeks, during which the remaining funds are transferred, and the legal title is updated at the land registry.

Post-purchase considerations

Once the purchase is complete, there are additional property obligations to consider:

●  Property management: Ensure the property is well-maintained and complies with all regulatory standards.

●  Tenant management: If the property is leased, manage tenant relationships and lease agreements efficiently.

●  Business operations: For owner-occupied commercial properties, focus on integrating your business operations smoothly.

Supporting growth and long-term value

Commercial property can provide wealthy investors and family offices with a stable base and the opportunity for capital growth.

As property increases in value over time, a well-chosen asset can support future expansion or portfolio diversification.

However, other factors such as local infrastructure changes, economic trends, and planning developments can influence performance.

Ensuring your investment has room for growth and aligns with your broader financial objectives makes it a good investment in the long term.
Expert guidance is vital.
Buying a UK commercial property requires careful planning, extensive research, and professional guidance.
By understanding the process and engaging the right experts, you can make informed decisions that enhance your investment portfolio.
Maritime Capital specialise in guiding family offices and private clients through the complexities of UK property investments.
Contact us today to learn how we can assist you with your commercial property investment needs.