Downsizing Commercial Property

Downsizing Commercial Property – The Pros and Cons

May 21, 2021 4:00 pm Published by

The experience of downsizing your commercial proeprty can be an intense and complex situation – especially if you are making the decision on a financial basis. Add to this, the impact on employees and the transportation of furniture and equipment and it quickly becomes an incredibly daunting responsibility.

This is especially relevant under the current COVID-19 pandemic, with many businesses now downsizing after the initial work from home order and the recent shift toward hybrid working (split between office and home working). Not to mention the general trend of many companies to move away from physical shops and towards the increasingly popular ecommerce sites.

It is for this reason that the team here at CSD – Real Estate Appraisers have put together the following blog with all the essential information on downsizing, including the various pros and cons…

What Is Commercial Downsizing?

Commercial Downsizing describes the process of moving into a property that is smaller than the one you currently own. It is a common term amongst residential homeowners who have found that their house feels empty now that their children have grown-up and moved out.

However, this term is also relevant to businesses who are making the decision based on financial or strategic reasons. For instance, if you are looking to cut costs or streamline your business model.

What Are the Advantages of Commercial Downsizing?

Downsizing can be highly beneficial when looking to reduce your outgoing business costs and supplement your income. By selling your current premises for a higher value than the purchase price of your new Commercial property, you can utilise these profits to enhance specific aspects of your business (equipment, recruitment, software, etc). Not to mention the fact that you could use this extra cash to settle any outstanding loans or debts.

What is more, by downsizing your commercial premises you are also working to secure your finances by limiting the costs that come with a larger building and the associated upkeep. More specifically, you will be spending less on those standard monthly maintenance charges (utility bills, rental fees, and general maintenance).

What Are the Disadvantages of Commercial Downsizing?

Alternatively, by moving to a different commercial premise you can run the risk of losing business or customers. Depending on the nature of your products or services, a change of location can affect your ability to provide the same service and (perhaps more crucially) to the same standard.

Furthermore, you may discover that a smaller commercial building is simply not suitable for your business and its products. Whether it is due to the accessibility of materials or proximity to customers, a less expansive property could directly affect your ability to produce your goods. A property may look perfect in principle, but in practice it may reveal several unforeseen issues or limitations that you previously had not considered.

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This post was written by Liz Graney