The benefits of owning your commercial premises for a family business

The benefits of owning your commercial premises for a family business.

Often the business premises is one of the biggest assets that a family business owns this can offer a number of advantages.

Control Over Space

Owning the property in which your family business operated gives business complete control over the space, how it is used and what you can do with the property.  If you are simply leasing the premises then you have less flexibility when it comes to fitting out the premises to you specific requirements without the need for obtaining landlord consent (which is not guaranteed and is likely to incur a cost).

Visibility and opportunity to expand

A permanent and recognised business address can enhance the visibility and credibility of the family business and this can appear to customers (future and existing).

In terms of the future plans of the family business, owning the property can be an advantage if there are plans to expand the business.  The premises themselves can be renovated or expanded as required without the constraints of a lease agreement and if different premises are needed then family business is not tied into a commercial lease that it can be difficult to terminate depending on the terms.

Potential income from tenants

If the property has extra space at all, or the potential to sub-divide then the family business has the option to let out this extra space to tenants and gives the ability to provide an additional income stream.  As the Landlord, this also gives the family business control over the building and any potential tenants and terms of any leases.

Stability/known costs and outlays

With property as your asset you do enjoy a degree of stability and the family business can better forecast expenses for each year.  The monthly payments are known and you are not at the mercy of rent reviews/increases and s budgeting can be more easily done. Owning real estate can also provide stability and balance to the overall portfolio of a business.

Increase in value of your asset

Generally speaking, Commercial properties increase in value over time.  This is true especially if the property is well maintained and within areas with growing demand. The increase in value to the premises is a great way to increase the value/net worth of the family business.

Succession Planning

The commercial premises is an asset and can be part of any long term succession planning for the family business and the asset can be passed down to future generations or sold to fund retirement or other ventures.

There are clear benefits in the family business owning their own commercial premises and a number of these have been touched upon in this article (this is by no means an exhaustive list), however,  it is essential to carefully consider all factors such as location, financing, maintenance costs, and market conditions before taking on an investment of this nature and balanced with the needs of the family business.

To discuss your family business real estate, please contact Jennifer Davidson, by email jdavidson@gilsongray.co.uk or visit our service page.

We look forward to welcoming you to future events as we continue to build a community of like-minded individuals passionate about family-run businesses.