Could the physical condition of your commercial property be limiting your ability to let or sell?
If you have a commercial property sitting empty and are considering a sale or letting, the first questions landlords ask are often commercial ones.
What price should it be marketed at? Should they wait for market conditions to improve?
Both are reasonable questions, but there’s another one that we don’t want you to overlook.
“What is the physical condition of your property?”
You’d be surprised how many times we have seen landlords treat this as an afterthought, often when it’s too late to do anything about it.
The fact is, the property’s condition directly impacts how it is perceived, how negotiations unfold and whether a transaction progresses at all.
It also affects the legal and commercial risk a landlord is prepared to take on.
Why deferred maintenance can be more expensive
Many landlords have delayed spending on repairs and maintenance in the last few years.
Rising material costs, supply shortages, higher labour charges and tighter margins all contribute to that reluctance.
Unfortunately, this decision to delay has consequences.
As tempting as it may be to assume that an unoccupied property will not change, lack of use and maintenance often leads to further deterioration.
Issues that the landlord could have addressed earlier often become more expensive and more visible by the time a sale or letting is considered.
When repairs are addressed as problems first arise, landlords often have more choice over how and when those issues are resolved.
How does a property’s condition affect lettings?
A poorly maintained property is harder to let. That’s the reality.
While prospective tenants will obviously be looking at the rent price, they will also want to understand what they are being asked to take on.
This includes the state of repair of the building, the extent of any repairing obligations under the lease, responsibility for services such as heating and air conditioning and whether works will be needed before the property can be used for their business.
Where a property requires significant investment from the outset, tenants are likely to factor that into their decision-making.
If the property is visibly run down, tenants are likely to price that risk into their offer. This usually shows up in requests for rent-free periods, reduced rent or landlord contributions to works, so be prepared to negotiate.
Many landlords resist those concessions, which often results in the property remaining empty for longer than anticipated.
Should you leave repairs or changes up to the tenant?
Carrying out improvement works before a tenant is secured can sometimes feel too risky.
For instance, a landlord may invest in repairs or upgrades only to find that an incoming tenant wants to strip everything out and start again.
Naturally, this would be frustrating for the landlord, making them feel as though their time and money were wasted.
However, this risk does not mean the property’s condition should be ignored. There is a difference between sensible baseline repairs and a full fit-out.
Addressing obvious disrepair, health and safety issues or presentation problems can make a property marketable without locking a tenant into a particular layout or use.
How does a commercial property’s condition affect a sale?
For sales, property condition feeds directly into price and buyer confidence. Visible disrepair may prompt surveys, further enquiries or price reductions late in the process.
Clear information and realistic pricing often do more to keep a sale on track than attempting to minimise or disguise issues.
Get support from our commercial property experts
Spending money is not always the answer, but neither is doing nothing.
A clear understanding of the property’s state, the likely expectations of buyers or tenants and the available negotiating tools puts landlords in a much stronger position for a successful transaction.
Contact our commercial property team for advice on preparing your property for sale or letting.
