Keeping Property & Building Costs Low for Business

June 29, 2016

For most businesses property is a substantial part of their cost base. After staff costs it is often the second biggest expense on the balance sheet.

The most obvious cost is rent, or in the case of owner occupiers any mortgage or interest payments. However there are many other outgoings associated with business premises that could be reduced if managed properly.

“The key is to get good advice before committing to occupy a building,” says Geoff Matthews, Senior Building Surveyor at Prendos.

“This advice should be tailored to the requirements of your business, and take in to account your short-medium term strategy and appetite for risk.”

He said cost savings should also be considered in the wider context of the business, after all property is only the second biggest expense. A high-quality working environment can increase staff satisfaction, improving productivity and reducing staff turnover.

In existing premises, the scope of change that can be undertaken without disrupting a business is limited, though it is often more cost effective to upgrade existing accommodation than to incur the expense of relocating.

Ultimately a well managed building can improve efficiency and minimise down time. It also sends a clear message to customers and is a key factor in how a brand is perceived. Therefore getting control of property is just good business.

Costs businesses are likely to run into:
Maintenance Costs
Old or poorly performing building stock may be cheaper to rent or own but it is likely to require more looking after.

Occupancy Levels
Small changes to layout, furniture and working practices can significantly reduce the amount o f space required.

Energy Costs
More efficient buildings cost less to heat and cool, they also provide a better quality working environment for staff.

Dilapidations / Reinstatement
Claims at the end of the lease can be a nasty sting in the tail, but can be reduced if managed properly.

The risks of under-insurance are obvious, but the additional costs for over-insurance offer no real value.

Statutory Compliance
Changes in legislation and compliance with existing laws such as the Health and Safety Act, Human Rights and the Asbestos Regulations can all add cost.

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