Commercial estate agents specialise in the purchase and sale of non-residential land and property. Whilst some estate agencies deal with both residential and commercial property, a number specialise exclusively in the latter, and some also offer additional property services such as consultancy, investment and asset management and valuation.
The process of acquiring and disposing of commercial property is complex. Commercial values are more difficult to assess than residential values, which are based primarily on the prices of comparable local properties. A commercial estate agent will also negotiate the lease with the seller, or deal with the acquisition of the freehold. Despite this, there is at present no mandatory training that commercial agents need to undergo, and commercial estate agents do not need to belong to a regulatory body.
If you intend to invest in freehold or leasehold commercial property, you will need to instruct a commercial real estate agent. If you have already found your property, the agent you use will be the one marketing it; however, you might prefer to find an agent first, and see what commercial properties they have on their books, before making a decision.
Ensuring your requirements are met
It is quite possible, if you are a new investor or the owner of a start-up business, that you will not yet possess the in-depth knowledge needed to make an educated purchase without specialist assistance.
For instance, the planning classification of a property will dictate what type of business you or your tenant can run from it – a restaurant is a completely separate category to a bar, as is an industrial complex to a laboratory. Depending on the type of business, the premises will also need to meet various standards regarding space and facilities. Whether you are purchasing the freehold or a leasehold interest will also have an enormous impact upon the way you manage your business or investment.
Whilst some commercial estate agents cover a broad spectrum, others specialise in specific property types; for instance, retail, office space or industrial. Local firms will also have more in-depth knowledge of a specific area, but will be less well-placed to oversee the sale of a country-wide chain of premises. A firm local knowledge of commercial property owners, including investment groups and property companies, is invaluable; however, a larger agency may be better-placed to facilitate very specific requirements or oversee a very high-value transaction.
As stated, regulation is not mandatory; however, you should always ensure that any agent you instruct belongs to a regulatory body, such as:
- ICBA (the Institution of Commercial and Business Agents);
- RICS (the Royal Institute of Chartered Surveyors);
- or NAEA (the National Association of Estate Agents).
Each of these organisations falls under the umbrella of the NFoPP (National Federation of Property Professionals), and agents that belong to one or more of these companies will adhere to a prescribed set of professional standards.
Additionally, check for registration with the Property Ombudsman. This will ensure that you have the option of seeking redress in the event of negligence or misconduct.
Agent fees are usually a percentage of either the value of the property, or the headline rent. Typically, if you are purchasing the property outright, an estate agent will charge between 1% and 2% (plus VAT) of the property value. If you are purchasing leasehold, an agent will charge around 10% (plus VAT) of the agreed annual rent, irrespective of the lease length.
Finding a commercial estate agent
If you are searching for an agent rather than a specific property, we recommend that you use the database of registered commercial estate agents on the ICBA website. Remember that the aid of an experienced professional is instrumental in the often difficult process of commercial property purchase, and this early decision is worth a great deal of your time and consideration.