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Commercial Property
The economy is the wealth and resources of a country or region, normally in terms of the production and consumption of goods and services. In England and Wales, the commercial property market is a major sector of the economy and provides the physical accommodation for almost all industries, places of work, shopping and leisure. As an asset class, the ownership of commercial property is a significant investment for the pensions industry.
In common with residential property, commercial property is transparent, with an established legal framework and recognised valuation system. However, unlike residential property, the commercial property market is largely unregulated. Commercial property is predominantly a business-to-business market, where the legal relationship between landlord and tenant is based upon a commercial contract, (popularly known as a 'lease'). With a commercial contract the parties are deemed to know what they are doing.
The commercial property market is largely self-regulating. The majority of advisers are qualified, answerable to professional organisations and codes of conduct. A Code for Leasing Business Premises has been drawn up and which although voluntary (if only through fear of political intervention) is generally adopted by major landlords. Occupiers too have various representative bodies such as the Property Managers Association and the British Retail Consortium. And, although the value of the commercial property market has been estimated at £700Bn, of which approximately half is owned by occupiers and the remainder by investors/landlords, the number of different advisers and active participants in the market is relatively small so that in itself serves to keep things in order.
Unlike residential property, where transactional attitudes revolve around personal life-style and aspiration, in the commercial property market the relationship between occupiers (including tenants) and property is inextricably linked to marketing. Whether owner-occupier or tenant, the property is intended to complement the corporate image of the business of occupier or tenant at the date of the commitment.
A corporate image is the public face of a business: often the generally accepted image of what the company stands for, it is a form of promotion to suggest a mental image to the customer; and generally where a company is concerned about image, the company will often spend a considerable amount of money and time to ensure the overall standard of presentation. [A corporate image is not just tangible, it also includes intangibles: for example, how it treats employees, customers, suppliers and advisers, and anyone connected with the business, including landlords. For many businesses, the required property will include a style of architecture, layout and design; and for retailers, a feature of the retail sector is the trading position, including the impact of any changes in the locality on the tradition position.]
Commercial property continues to evolve. Unlike residential property where architectural styles and fashions of the time can come under the heading of 'heritage' to be preserved at all cost, and as listed buildings, commercial properties that have reached the end of their useful life or where the size, layout and configuration is obsolete are more likely to be refurbished or demolished and redeveloped, unless of historic importance. Even then, it is possible the external facade would be preserved, whilst all the innards stripped out and rebuilt to modern standards. Consequently, the age and construction of the property might not considered that significant between landlord and tenant because any onerous obligations for repair, maintenance and decoration could be circumvented by the provisions of a tenancy.
The commercial property market encompasses all property that is used or could be used for a business purpose. The business does not have to have a profit motive, but a fine-line exists between a hobby and a business. In the Landlord and Tenant Act 1954 Part II, one of the statutes governing tenanted commercial property, the definition of “business” includes a trade, profession or employment and any activity carried on by a body of persons corporate or unincorporate. That definition has been held to cover a sports club, but not to extend to a Sunday school as a spare time activity in the tenant's home, and taking in a few lodgers has been held to be outside the definition. Also, the premises need not be the place where the business is carried on. Although commercial property excludes residential property in itself, it is by no means unusual residential property to form part of commercial premises and so be subject to the law relating to commercial property and business tenancies.
The commercial property market is everything that is not residential or agricultural. Retail or shop property is a sector of the commercial property market and all buildings that are used or could, with planning permission, be used for any type of retailing including retail warehouses, retail showrooms, restaurants and financial and professional services and that fall into Class A of the Town and Country Planning (Use Classes) Order 1987 (as amended) are in the category of shop property.
In common with residential property, commercial property is transparent, with an established legal framework and recognised valuation system. However, unlike residential property, the commercial property market is largely unregulated. Commercial property is predominantly a business-to-business market, where the legal relationship between landlord and tenant is based upon a commercial contract, (popularly known as a 'lease'). With a commercial contract the parties are deemed to know what they are doing.
The commercial property market is largely self-regulating. The majority of advisers are qualified, answerable to professional organisations and codes of conduct. A Code for Leasing Business Premises has been drawn up and which although voluntary (if only through fear of political intervention) is generally adopted by major landlords. Occupiers too have various representative bodies such as the Property Managers Association and the British Retail Consortium. And, although the value of the commercial property market has been estimated at £700Bn, of which approximately half is owned by occupiers and the remainder by investors/landlords, the number of different advisers and active participants in the market is relatively small so that in itself serves to keep things in order.
Unlike residential property, where transactional attitudes revolve around personal life-style and aspiration, in the commercial property market the relationship between occupiers (including tenants) and property is inextricably linked to marketing. Whether owner-occupier or tenant, the property is intended to complement the corporate image of the business of occupier or tenant at the date of the commitment.
A corporate image is the public face of a business: often the generally accepted image of what the company stands for, it is a form of promotion to suggest a mental image to the customer; and generally where a company is concerned about image, the company will often spend a considerable amount of money and time to ensure the overall standard of presentation. [A corporate image is not just tangible, it also includes intangibles: for example, how it treats employees, customers, suppliers and advisers, and anyone connected with the business, including landlords. For many businesses, the required property will include a style of architecture, layout and design; and for retailers, a feature of the retail sector is the trading position, including the impact of any changes in the locality on the tradition position.]
Commercial property continues to evolve. Unlike residential property where architectural styles and fashions of the time can come under the heading of 'heritage' to be preserved at all cost, and as listed buildings, commercial properties that have reached the end of their useful life or where the size, layout and configuration is obsolete are more likely to be refurbished or demolished and redeveloped, unless of historic importance. Even then, it is possible the external facade would be preserved, whilst all the innards stripped out and rebuilt to modern standards. Consequently, the age and construction of the property might not considered that significant between landlord and tenant because any onerous obligations for repair, maintenance and decoration could be circumvented by the provisions of a tenancy.
The commercial property market encompasses all property that is used or could be used for a business purpose. The business does not have to have a profit motive, but a fine-line exists between a hobby and a business. In the Landlord and Tenant Act 1954 Part II, one of the statutes governing tenanted commercial property, the definition of “business” includes a trade, profession or employment and any activity carried on by a body of persons corporate or unincorporate. That definition has been held to cover a sports club, but not to extend to a Sunday school as a spare time activity in the tenant's home, and taking in a few lodgers has been held to be outside the definition. Also, the premises need not be the place where the business is carried on. Although commercial property excludes residential property in itself, it is by no means unusual residential property to form part of commercial premises and so be subject to the law relating to commercial property and business tenancies.
The commercial property market is everything that is not residential or agricultural. Retail or shop property is a sector of the commercial property market and all buildings that are used or could, with planning permission, be used for any type of retailing including retail warehouses, retail showrooms, restaurants and financial and professional services and that fall into Class A of the Town and Country Planning (Use Classes) Order 1987 (as amended) are in the category of shop property.