When looking at a commercial property investment there are three main options; office, retail, or industrial. Each has its own pros and cons, and it's important to weigh up the factors to find the ideal property for your portfolio. A smart investment will see long-term cash flow locked in quickly in the form of a committed tenant.
Office space is usually the lowest yield investment, but it is also less risky than retail and industrial. Like buying shares in a bank instead of an untested tech start-up; business tenants tend to stay in one place longer than retail, and office space is easier to fill than a warehouse.
First impressions count — any business wants to impress their clients and visitors, so choosing an aesthetically pleasing building with an impressive lobby is a good first step.
Location matters — businesses work with other businesses, so a tenant will look to be close to other offices or the CBD. They will also want to be close to shops, cafés and transport so employees can keep a healthy work-life balance.
Fitout and flexibility — hopefully the tenant who takes on the lease in your commercial investment property intends to grow their business. This means your property (and your lease agreement) need to allow for growth and change.
Investing in retail property can yield high returns if the location is right and if a tenant stays on for a long time. Although shopfronts can be a more volatile investment decision, because your success depends on the turnover of another business, the right premises will be a beacon for a strong business.
Location is key — foot traffic and street frontage in a busy area are vital to the success of a retail business. When looking for an investment property in a retail precinct, think like a customer and shop owner at the same time to find a shopfront in the perfect location.
Anchor tenants — shopping areas will often have an "anchor tenant" who attracts other retailers, because they bring in customers. Look for investment opportunities which offer shoppers lifestyle choices and your investment will become a sought-after retail location.
Factories and warehouses are often purpose built, like a furniture manufacturer or cold storage facility. Finding a tenant who can use these facilities can be challenging. However, because a tenant is likely to stay for a long time, this type of investment can be extremely rewarding in the long term.
Location — as with office and retail space, location is important for industrial businesses. Things like access to freeways, rail lines, or ports can be key factors.
Original design — from an investor's point of view, it is critical to consider the types of businesses who could occupy a warehouse or factory. Know what businesses are expanding to need space, and invest in an industrial property to suit those emerging industries.
Commercial property investment can be a prosperous move for any savvy investor. Finding the property and location which suits you is key to a successful investment. At Altegra we focus on building relationships and optimising assets for commercial property investors. Contact us today to talk more about your commercial investment property options.