If you’re in the market for a commercial real estate investment in Perth, there is much to consider. You want to choose the right property type, in the right location, and at a time that will provide you the best possible return.
In this article, we outline some key factors to help guide your search for a commercial property investment in Perth.
Why a commercial property investment?
Property investors in Perth can generate a profit by allowing tenants to lease their commercial space. Compared to other property investments such as residential, commercial generally offers a higher cash flow and therefore greater yields.
Another benefit is that commercial tenants are usually more responsible as they have a reputation to withhold. Plus, the lifespan of a lease can be negotiated to last in excess of 5-10 years in some cases. These advantages of commercial investments are what make them more secure than a residential investment, from an investors point of view.
For more differences between residential and commercial investments, see this article.
Commercial Property Types
Perth is home to a wide range of commercial property styles, each with varying operational needs.
Office – An office space is the backbone of almost every business structure. Depending on the industry and needs of the business, an office may be located deep in the heart of the CBD, or in a more suburban area.
When investing in an office, location plays a leading role. Most tenants will want an office in close proximity to transport routes, and in an area where employees will enjoy the surroundings. Consider nearby dining facilities and natural open spaces for hours outside of work and unlike other industries, most businesses prefer an office near companies with similar interests.
Industrial – Investments in industrial properties can range from a small distribution centre to a large manufacturing site with major logistics and heavy machinery. Industrial properties often feature very different structural facilities like warehouses, storage yards, offices, and wide loading bays.
Like a standalone office, tenants will want an industrial property located near food outlets and sufficient transport routes, especially if they require access from heavy trucks. Other crucial amenities include a kitchen/dining area, bathrooms, and office space.
Retail – A retail property may be a streetside shopfront or a shopping centre with many tenants. These sites should be optimised for as much foot traffic as possible, and often require back-of-house access for deliveries.
The property will fetch a higher rental yield if it presents opportunities for advertising using existing signage or is naturally in a highly visible position. If the retail site is a centre with multiple units, the property should cater to a variety of tenants and provide some common areas that can be utilised by all – such as bathrooms.
Additionally, a multi-functional facility would be ideal if it has room to expand as the variety of retail outlets will attract a wide range of consumers.
Mixed Use – A mixed-use commercial property is like a retail shopping centre whereby it is home to multiple tenants. A commercial strata property might take the shape of an office complex or shared warehouse and needs the communal facilities to satisfy all parties.
Much like other commercial properties, a strata property management system is the best way to ensure all tenants requirements are met.
Speciality – ACommercial properties may be suited to a unique business offering. Examples are service stations, cinemas, hotels, childcare centres, and pubs.
More often than not, these tenants want a location with limited competitors in the area. If this is on offer, companies will be willing to negotiate a higher lease.
Where to look?
In Perth, commercial properties are located in virtually every suburb. For retailers and specialised commercial properties, a location in a highly populated area, away from competitors is the ideal place to set up shop. See our list of commercial properties for sale in Perth.
For the bigger industrial facilities, there are restrictions ensuring they are grouped in designated industrial zones. For a breakdown of these locations, see this Guide for Industrial Real Estate.
When should you invest in commercial property?
With the WA borders now open, the commercial property market is a hotbed for investor activity. According to Domain, the vacancy rate for commercial sites is “historically lower compared to previous years”, meaning property investors are receiving a greater return from their tenants.
In other words, now is a great time to secure a commercial property for sale.
If you are looking to buy or sell a commercial property in Perth’s South_East Corridor, Ross Scarfone Real Estate are the professionals to call upon.
Our vast experience means we have the industry knowledge and excellent service to assist you in making a great return. See some of our commercial properties for sale, or get in touch for an appraisal of your current property.