Buying property in the Cayman Islands (both commercial and residential) is a formidable task because the demand far exceeds the supply. Nonetheless, the approach to buying a commercial property is entirely different from purchasing a residential property.
Unlike residential properties, the prices of commercial properties are not influenced by comparable properties. Instead, commercial property’s price depends mainly on the revenue it generates.
Due to the global pandemic, large office spaces and offices for new businesses have decreased. On the other hand, there is a strong demand for small, all-inclusive suites in the 150 square feet to 350 square feet range that offers shared amenities.
Additionally, there is substantial demand for office suites ranging from 600 square feet to 1,200 square feet and above. In this blog, we will discuss 12 tips for buying commercial real estate in the Cayman Islands.
12 Tips For Choosing the Ideal Cayman Commercial Property
1. Set Clear Expectations Of Your Business Premises: Examine the size, layout, location, amenities, structural requirements, and parking at the premises to see if they meet your expectations. What are your long-term business goals? Will your choice of commercial real estate impact your future business plans?
Five years from now, if you want to expand your business, will your premises be able to accommodate a higher number of employees, increased furniture, and other inventory without causing a massive dent in your finances? You need an action plan asap to address the situation before it gets out of hand.
Check if you can make changes or improvements to the property in the future. There is no question of expanding the premises or making improvements if the property is a part of a large business complex. Prepare a detailed list of all your requirements and follow a top-down approach. Such an approach will help you decide what factors are the most vital for your business while choosing the ideal commercial property.
2. Location Matters: As an entrepreneur, you need to keep several things in mind while choosing the location for your business. Your business office should be accessible to customers, clients, suppliers, and employees, but it should not cost you a fortune.
While choosing a location for your establishment, think about footfall, where your competitors are located, delivery limitations, parking space, and if the place is favorable for business.
3. Buy Or Rent? Figure out what is best for your business. Do you wish to own your office premises, or do you prefer a commercial property for rent in the Cayman Islands? Consider the pros and cons of renting a commercial space as opposed to owning your office premises.
4. Business Rates: Before you take the plunge into buying or renting commercial property, understand what you will be required to pay as business rates. Check your eligibility for help with business rates.
5. Legal Considerations: Buying a commercial property can be complicated, like purchasing a condo rental in Grand Cayman. Like condos, you have business complexes or buildings with adjoining walls with other companies and other physical elements different from private offices.
Various considerations are involved with commercial properties like planning permission, fire, health & safety regulations, insurance, accessibility, licenses, and much more. If you are purchasing the commercial property, you may have to pay stamp duty. While renting an office space, you will have to agree to the lease terms. Make sure that you get legal advice before entering property purchase transactions.
6. Search Techniques: No rulebook outlines the right and wrong ways to find commercial property. Things that work for a particular company may not work for you. Hire a real estate professional, visit business districts, commercial areas and do your research. Alternatively, you can also find a reputable real estate website and check out its commercial real estate listings.
7. Financing Options: Like buying a house, the process of purchasing a commercial property also requires a pre-approval process. Have your financing options sorted out before you embark on your search for a commercial property? When you have your financing options sorted out in advance, completing the purchasing process will become smooth & stress-free once you find the perfect commercial property.
8. Stop Chasing Perfection: There is no such thing as the perfect office space. Compare the commercial or office spaces with your requirements list and scratch out those that don’t meet your criteria. It is essential to be practical while searching for an office space. Some offices may have great interiors and be spacious, but your target market might be somewhere else. Don’t make the mistake of settling for something fancy, especially during the initial stages of your business. You will end up moving out eventually, spending more than you planned, causing unwanted complications.
9. Don’t Rush Things: When searching for the perfect commercial property, keep a cool head. Don’t be like a bull in a China shop. Gauge all your office options carefully before sealing the deal.
At any point in time, if you feel that you are being compelled to close the deal fast, that’s a red flag right there. Either the landlord/seller is hiding something from you, or they are unprofessional people.
Choosing the right office is a crucial decision for your business. Each step you take will have far-reaching consequences, from investor relations and employee productivity to making the ever-lasting first impression on your clients.
A wrong decision can hamper your business, prevent you from retaining clients and attracting new ones, causing loss of money & reputation in the long run. Apart from the lost opportunities and revenue losses, you have to start from scratch, totally not worth it.
Do your homework, consult experts, and scrutinize each aspect properly.
10. Always Negotiate: This may sound simple, but many entrepreneurs overlook this aspect.
Everything is negotiable, including the rent and price of the property. Follow the market closely; the conditions might not always be promising for sellers or landlords. You can use the conditions to your advantage and negotiate the terms of the agreement.
11. Adapt To The Post-Covid-19 World: The Covid-19 pandemic has changed our lives drastically. Not just our lives, it has changed the way businesses deal with customers and vice-versa. Instead of complaining and being stubborn, we need to accept the new reality and make the necessary changes in our lives.
For example, many businesses have switched to smaller, compact offices while providing employees with remote working options. Adopting such measures helps companies save thousands of dollars and reduces the rates of infection. Several businesses have benefited from this innovative approach.
Even though you move to a smaller office with fewer employees on the premises, you still need to adhere to health & safety standards, social distancing, and ensure proper sanitization of the premises. This process may be challenging at first, but you can make it work with the correct practices and management protocols.
12. Exit Strategy: Despite treading carefully, sometimes situations may not be in our favor. You may have to terminate your office lease or move to a new location. No matter what happens, a setback should not deter you from conducting business operations. It is wise to have a contingency plan that can bail you out of problematic situations.
Factors such as natural calamities, new regulations, changes in business demographics, structural inadequacies can prevent a smooth business functioning. Having an exit strategy can help you overcome these hurdles and get back up on your feet.
Ask these questions before you start searching for your commercial office space:
- What is the nature of my business?
- Where is my present office?
- What is my budget?
- Are there opportunities for growth & expansion?
- Can my employees function optimally in the new premises?
- What is my company culture?
- Does the office comply with government rules & regulations?
- Are the lease and rental rates secure?
Searching for the perfect office means that your business is growing and that you care about your employees. Despite that, finding the best commercial space for your business will always be a challenge. You will have to understand the options you have and also your limitations. Follow the points mentioned above. If you head the right way, success will always be within your reach.