Businesses looking to buy into commercial real estate are spoiled for choice in Australia. There are multiple options which all offer attractive returns but ultimately the key is to pick the best investment that will suit your specific business.
1. Office, Retail or Warehouse
Before embarking on buying or leasing any of the above property types, you really need to really question the need and the use. For instance, it may seem like a great idea to hire an office space with a conference room but if the business doesn’t physically meet its clients then this may not be necessary.
Buying or leasing retail property is dependent on whether the customer base needs a shopfront to engage with the product. In these days where so much is purchased online, sometimes a physical retail outlet may not be necessary. The location of the retail outlet is crucial to consider if you want to attract new customer traffic.
A warehouse property is terrific if the business has a clear need for storing product or resources or if there’s a need for a space for creating or manufacturing product.
In all cases, you should make a decision based on your business’s history; your projected growth and expansion plans. Whether you buy or invest in a commercial property there are significant financial outlays. So, you need to be confident you will be on the premises for a substantial amount of time.
2. Office Fit Outs - What Does Your Office Fit about say about your company?
The way your office feels and presents is extremely important. It influences the way your staff think and act as well as the way visitors or clients react. It sets the tone for your company’s culture. A disorganised office with a layout similar to a rabbit warren will likely stimulate disorderly thinking. It is not just whether the office is messy or tidy. A bland, sterile office probably won’t encourage creative thinking or innovation.
Your business’s own aesthetic and style should strongly influence the way you fit out the office. This should be part of every feature, from the office lighting to the storage areas, the work stations, the meeting rooms and the reception area. Any office fit out should be considered part of the branding process. This means any office fit out consultant you employ, should also work closely with your branding or marketing team.
3. Should I Rent Or Buy A Commercial Property?
This question very much depends on your type of business and your current and projected needs. If you are looking at a retail property there are clear pros and cons. Commercial property leasing allows flexibility, especially if the location doesn’t prove to be as good as planned. However, in most cases, buying a commercial space is very rewarding as it allows you to renovate or refit per your business needs. You also have a tangible asset that will hopefully accrue capital growth each year. If it’s an office space you can sub lease parts of the building if you want to add extra revenue. Plus, you can make important structural changes when you need to. Owning a commercial property also gives you a consistent location and helps establish a base that customers will remember.
However, there is more initial set up and capital expenditure in purchasing a commercial property. Banks tend to make it more difficult to get commercial loans. The LVR (loan to value ratio) is higher for residential loans – you can potentially borrow up to 90% of the property’s value - than it is for commercial loans. Some lenders will only lend up to 60 – 70% of the LVR for commercial properties. However, this is entirely dependent on your business’s financial history and the details of the property you are looking at.
Ultimately, any move toward either buying or leasing a commercial property is a big decision and one you shouldn’t enter lightly. Talk with an experienced consultant at Altegra and get sound commercial property advice that is specifically tailored to your business.