Owning your own commercial premises is a dream many business owners share. After all, why keep paying rent when you could be investing in something that's yours? But in today’s market, finding the perfect commercial property in many parts of the UK can feel as elusive as spotting a unicorn.
Take one of my clients, for instance. They spent nearly five years searching for the right space. So, when a plot of land next door became available, it felt like they'd won the lottery. They could finally build their dream premises from the ground up.
But this week, as I crunched the numbers for them, a harsh reality emerged. Yes, on paper, the numbers looked good. But despite the allure of starting from scratch, I had to advise them against it. The reason? The hidden costs and challenges of building on undeveloped land far outweigh the benefits, especially when compared to purchasing an existing commercial unit—even if it's a fixer-upper.
Here’s Why:
Utilities – As a landowner, you're responsible for connecting essential utilities like gas, sewerage, and electricity. This isn't just a minor expense; it can easily run into five figures, and in some cases, even hundreds of thousands of pounds.
Internet – Similar to utilities, laying down internet cabling is on your dime. I had one customer who was quoted a staggering £200,000 just to get connected!
Planning Permission – If you think navigating planning permission will be straightforward, think again. The process is often a tangled web of red tape, bureaucratic delays, and frustrations that can drive even the most patient business owner to their wits' end.
Groundworks – Levelling and digging is not cheap. But concrete? That's like liquid gold at around £100 per m³.
Project Management – A commercial build is a massive undertaking, and it requires a dedicated project manager to keep things on track. Most small businesses don’t have the luxury of an extra team member to spare, so this becomes another significant cost—both in terms of money and time.
Building your own commercial space isn't just about the financial burden. It's also about the immense amount of time and energy it demands. For 24-36 months, your business will be consumed by this project, pushing all other growth plans to the back burner. It’s one of the biggest commitments you’ll ever make, and it’s not something to take lightly.
I know this from experience. I’ve been involved in several projects like this, and they always end up being far more demanding than initially expected.
So, while the idea of custom-building your perfect commercial space might be tempting, it's crucial to consider the hidden costs and challenges before diving in. Sometimes, that slightly run-down property that's already standing might just be the better investment in the long run.
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