Easy ways to attract more potential buyers and tenants
Whether you’re planning on buying a vacant commercial property or one that already has lessees, everyone wants a good return on their investment.
Although investing purely for capital gain is possible with commercial real estate, yield is the name of the game so it’s important to consider how attractive your business premises are to potential lessees.
With just little bit of cleaning and renovation work, and pushing for the local council to extend some of the town planning and zoning regulations, you can increase your commercial property value.
Push council for zoning changes
Location is important when it comes to commercial property.
If you’re investing in office space for example, consider its proximity to local infrastructure like bus and train lines as well as cafes and restaurants. This will help attract white collar and even blue chip tenants.
Of course, this is looking at commercial property investing from only one angle: you also have to look ahead to possible zoning changes in your area.
Gentrification is a very common reason for suburbs in the inner city and even on the outskirts to suddenly flourish from industrial and manufacturing hubs to chiche residential hotspots.
You often see office space redeveloped into residential units or warehouses and factories converted into new office space or homes.
However, the gentrification process is slow and you have to be on the front foot to buy at the right price before other investors take notice. Good commercial investors keep a good eye on demographic shifts.
It may be that you bought a residential property a few years ago and, due to property development in the area, many young families have bought homes, driving the need for child caring services.
You may then be able to get a approved for a development application (DA) to convert the property into a child care centre.
It can be difficult to get information on possible zoning changing by speaking with council directly because it generally takes years and millions of dollars for them to make a decision.
Consider enlisting an urban planning consultant because they’ll have connections with the planning staff in the local council which may give you some insight as to whether zoning changes are ahead.
Alternatively, you can actually receive alerts from property data providers like CoreLogic that notify you when councils across Australia change their zoning on particular properties or neighbourhoods. This can help you decide whether it’s worth buying, selling or developing and get a return on your investment.
Get council to accept longer opening hours
Extended opening hours can help to create more foot traffic and attract more potential customers for businesses.
For instance, a clothing store business located nearby the Central Business District (CBD) would benefit greatly. Restaurant and cafe businesses would also benefit.
Of course, getting councils to change their minds on this matter can be tough because with longer trading hours comes more noise and traffic meaning you’ll need to prepare a community impact statement.
Often the best way to go about it is to get in touch with local businesses about your proposal to extend opening hours and go into the negotiations with council as a united front.
Make the commercial property more attractive
When you’re buying in an area with an oversupply of office buildings, for instance, you’ll need to fight hard to attract lessees.
First impressions count when you have potential buyers or tenants inspecting the building.
Although the following tips may not necessarily increase the final value of your property, it may just be the ace up your sleeve you need to score the tenant or sell the property.
Clean the place up!
Sounds obvious but the idea of presenting a ‘blank canvas’ to prospective lessees is just as important in the commercial world as it is in the residential market.
As they inspect your property, people want to imagine their own business operating from the premises so try to get of rid of any personal or business paraphernalia from the previous lessees.
This includes office decorations, office stationery, picture frames and furniture. It may not always be possibly to do this if the current lessees are still in the process of vacating but try to work with them to store as much away as possible.
There are much easier things you can do though such as mopping the floors, cleaning the fixtures and windows, dusting or even steam cleaning the carpets.
Lighting
With just the right lighting, you can make an office, warehouse, factory or any other type of commercial space look bigger and cleaner.
Take note of the type of lighting – clean white light is usually best.
Also, keep any shutters and blinds open and keep the windows clean to let the maximum amount of light into the room.
Repairs
By plastering holes in the walls and adding a fresh coat of paint, you can quickly make the premises look brand new again. The best part is that it’s cheap to do!
Replacing old and tattered carpets and fixtures can cost a little more but it may help you attract lessees in a renter’s market.
The next step is ensuring the building is structurally sound. It may be worth paying for a building inspector to have a walk-through of the premises especially if it’s an older property.
Tip: Always get approval before undertaking construction work
Remember, it’s up to local councils to decide what zoning is appropriate in their area so don’t simply start converting or extending a residential property or warehouse without getting a proper DA approval or permit.
The council may well deem the building work illegal and force you to scale back your plans or even force you to pay for reparations.
If you decide to go ahead with the renovation work without proper approval, your building insurance and public liability insurance won’t cover you and, when you decide to sell, you could face thousands of more dollars in reparation work.
That’s because the structure and building standards of the premises should match with what’s on council’s records. You could potentially lose the sale!
Proper approval and permits are usually required in the following circumstances:
- Renovating or extending heritage sites or properties located in an overlay.
- Changing the look of an existing shop front.
- Major fit-out work.
- Installing outdoor seating or heaters on a footpath.
- Any other work that encroaches on government property or parklands.
Do you need a commercial property loan?
Call us on 1300 889 743 or complete our free assessment form and we can tell you if you qualify for finance.
You could soon be on your way to building a strong commercial real estate portfolio with the help of a specialist mortgage broker.