The pros and cons of running a business from a residential area

Running a business from a residential area can be a tempting concept for many reasons, but it’s not always the best choice for the success of your enterprise, according to Jason Gregoriades, a member of the Rawson Property Group’s Commercial Business Development Team.

“The pros and cons are very subjective,” he says, “and depend entirely on the nature of your enterprise and its operational and physical requirements, but by assessing these in conjunction with the most common benefits and pitfalls of residential business premises, you should get a good idea of whether it’s the right choice for you.”

As a first step, Gregoriades advises taking an objective look at how your day to day processes would impact your surroundings. “Certain business are just not suited to a residential environment,” he says. “Manufacturing companies, for instance, tend to make a lot of noise with loud machinery and operations – that’s a problem for neighbours. A stream of massive trucks navigating small residential roads would be an issue as well, as would housing dangerous chemicals, or requiring particularly large warehousing or storage space.”

If your processes are unlikely to raise any red flags, you can move on to weighing up the pros and cons as they would apply to your business. The most common ones to consider are listed below.

Renting a business-zoned property in a residential neighbourhood will cost far less than renting an equivalent space in a purely commercial area. This is often the primary motivator for running a business in a residential area, according to Gregoriades.

Surroundings play a huge role in productivity and company morale, and the tranquillity of a residential neighbourhood can help create a relaxed and happy work environment.

Working in a residential neighbourhood tends to create a more down-to-earth, approachable and personal company image, which can be a powerful asset to businesses trying to stand out from a faceless, corporate crowd.

Inadequate parking facilities are an everyday reality of working in a residential neighbourhood. The more staff and customers your business has, the more of a problem this will be.

“Parking issues can have a knock-on effect on the image of your business,” warns Gregoriades. “Neighbours don’t take long to get annoyed by increased traffic, road congestion, and blocked driveways, and that can create a very negative image of your business in their minds which can easily spread to friends and relatives.”

Most commercial properties come with some form of onsite security, whether it’s a gated business park, a guard for the building, or a remote monitoring system. Properties in residential areas don’t normally have this benefit, however, which means you’ll need to factor hiring security into your cost of doing business.

“Some neighbourhoods will require more security than others,” says Gregoriades, “but it’s not something you should neglect – offices can be seen as ‘soft targets’ by criminals who know that the premises will be empty after hours.”

Residential neighbourhoods impose certain signage restrictions on businesses which could make your premises difficult for new customers to find, particularly if you’re not located on or near a main road. Being some distance from major thoroughfares also impacts your staff – especially those using public transport – who could find their commute significantly longer and more complex than if they were travelling to a commercial centre.

While these are the most common pros and cons associated with operating a business from a residential area, they may not be the only factors that affect your decision, and they might not always be as positive or as negative as they seem.

“You need to consider your business’s unique requirements to determine how the various factors will influence the success of your operation,” says Gregoriades. “If you’re in any doubt, talk to a commercial property consultant or a real estate agent with commercial experience in your area of interest.”