In the world of Commercial real-estate, there are three main types of properties available: office, retail and industrial. If you have decided that your portfolio could benefit from a commercial property investment then you may be in the market to purchase your very first office space.
How does commercial property differ from a residential property as an investment
Office space offers a low yield and can be a safer investment than retail and industrial properties, however, it differs greatly from residential properties in its risk factors. Some commercial property can remain empty for long periods of time and the cash flow may be an issue during this period, but with some planning and choosing the right property a commercial property may be a perfect fit for your portfolio. Commercial properties offer some great advantages such as longer leases, higher returns on investment, no rates or other outgoings and smaller deposits required to get into the commercial property market.
What should you be considering when looking for a great office for investment purposes?
Consider the three L’s: light, looks, and location.
- How much natural light does the office provide to office workers, remembering that office dweller's spend most of our working days indoors so natural light in all areas is attractive to a potential tenant.
- What does it look like, i.e. is it well presented both internally and externally. Remembering that the external maintenance of your office investment is your responsibility as the landlord and the internal maintenance is up to the tenant (maintenance only though, this is related to the upkeep, not necessarily the entire refit, aesthetic and layout of the office space.)
- Finally, where is the office located, is it among other offices of a similar size and shape, does it have easy access to parking or public transport and does it offer other services likes cafes, restaurants and parks nearby for staff to use on their break times? All of these elements are key to potential tenants and should be considered when you are searching for your first office investment.
Always remember that with all investing, speak to your financial planner about what is best for you and your personal financial situation.