Commercial Office Space in Mohali – Are you tired of untimely calls to fix that leaking tap, or tenants routinely leaving your house because they changed jobs? Is your landlord threatening to evict you and your established business out of his property? Let’s see what is commercial property and benefits of commercial property.
Whether you’re an investor in real estate, a property owner thinking of whether to rent out your space as a commercial unit or a businessman confused between using a residential unit as an office or renting a commercial space, you should consider the following advantages a commercial space has over a residential property. Let’s learn about some of the benefits.
The commercial office space is an altogether different ball game. There are many advantages to investing in this space.
Comfort, constancy and collateral value
Commercials spaces available with us by their location (proximity to markets, malls, shopping centers) are likely to fetch you businessmen and entrepreneurs who would want to own the place for longer durations, a fair return for a longer time. This enhances the stability of your investment and also reduces potential losses due to an interim vacancy. This leads to a win-win situation for both the tenant and the landlord. The tenants get the safety net of fixed overhead expenditures whereas you are assured of fixed returns, which are also looked at quite favorably by banks. In contrast, most residential contracts are for eleven months or yearly renewable, leading to several renegotiations. People may also leave the city due to several reasons such as transfer from their existing job or marrying, whereas a business is far less likely to disband an existing base.
When it comes to the critical obligation of major repairs, maintenance, and overhauling, most standard residential contracts fix the responsibility of the landlord largely for the reason that these are year-to-year leases and since either party may vacate the property easily (the notice periods are usually 30 days) it is the landlord who should foot the bill to maintain the services for the next tenant. In the case of commercial properties, the companies appreciate the freedom to move furniture and fixtures and undertake modifications to suit their office needs. Companies often redo the décor and wall-paint to match their logo-themes. Thus, the burden to finance repairs and maintenance in most cases would take by these organizations themselves, leaving you with little to worry about.
Reduced to negligible chances of default
While this may not be a blanket rule, but medium to large companies are less likely to default in the payment of rent, unlike small residential tenants with limited household resources. A company, because of the goodwill associated with their brand and the need for stability in their operating base is more likely to agree to pay upfront for months or even years of rental value, making it easier for you to negotiate a fixed-sum deposit. Moreover, due to the additional investment by your corporate tenant, they wouldn’t want to leave the location anytime soon.
Rent laws are strictly followed
While residential property rents may be escalated only up to the limit prescribed by the state’s own rent control law. There is no such clause for commercial property. The more established a business gets in a location, the less likely they would be to undertake a change of location. And would be willing to pay more to keep your property.
Grading, returns and risks
Ever heard of a house-property being given A, B or C grades based on their quality? Don’t worry; there exists no such system for residences. In sharp contrast, most commercial properties are classified into three categories. Class A covers newer commercial buildings with the best amenities and aesthetics. Also, class B covers average office spaces which may be old but fetch above-average rents. Class C category buildings are the least desirable and offer low quality, cheap spaces. In the recent past, commercial properties in Grade A have offered a 9-11 percent rate of return. While Grade B properties fetched around 7-9 percent return. This classification gives rise to not just better rents and more value in the eyes of a tenant. But also assures a higher rate of return and lower risk than residential properties.
While there are several advantages of owning and renting a commercial property, it does come with its risks, all of which can be effectively minimized by suitable alterations in your contract. For example, the exit-provisions may be one-sided- a long lock-in period favoring the tenant. It prohibits the landlord from evicting the tenant for a certain number of years. Generally, longer lock-ins generate better returns for the investor. The inherent risk in letting out the property for longer durations which shouldn’t be ignored. In such a case, it would be prudent for you as the landlord to seek a higher security deposit.
Commercial properties with us are a means to have better returns with lower risks.
Also See: Commercial Property in New Chandigarh