How Do you Select Best industrial property and commercial business Buildings for sale in Milnerton?
[tag] is a specialist field. Not all property agents know enough about the commercial property market and the property type to do it well. Sellers in Milnerton should choose their agent with care.
The owners of investment property that want to sell their asset should carefully choose a real estate agent that is well versed in the market trends and the property type. That agent should also show a high level of current market share and success in commercial property in Milnerton over the years.
Selling commercial property is not an ‘experiment’ or an exercise in ‘hope and pray’. When undertaken correctly in any market situation by a skilful agent, a property will attract enquiry and a sale is possible. The result then sits on the client’s ability to accept the industrial property for sale market price and market evidence. There are always buyers out there; they just have to be found and the sellers need to be accepting of the market trends.
Interesting Facts About Industrial Property and Commercial Business Buildings for Sale in Milnerton:
Not all commercial investment properties should be auctioned, but the auction method of sale does have real advantages if the property is just right and the market is accepting of that method of sale. Here is why.
The key governing factors to determine if auction is a real chance or choice for the property owner are the current levels of enquiry for that property type, and the prevailing business sentiment. If this is the case then you can look further at auction.
The auction method of sale is a proven time based sale process that flushes out the enquiry and if the investment property ticks all the other boxes such as:
- Preferred property type in the local market.
- Good improvements on the property.
- Location factors that attract enquiry.
- Capital growth opportunities.
- Good tenant profile or anchor tenant.
- Good lease structure that supports stability of rent.
- Low vacancy factors and associated risk.
- Tenant mix that is well structured and balanced for property function and rent growth. This is really important in retail property.
- A realistic seller with a reserve price that allows for comparable property evidence and other sales history.
- A vendor funded marketing campaign that targets the right buyers and activates enquiry from them.
- Acceptable (and not excessive) levels of comparable property on the market that are competing with the subject property coming up for auction.
Do not overlook the advantages of auctioning a commercial property. Just make sure all the other existing elements are in support of that method of sale before you start.
Commercial Real Estate Property
Many commercial real estate agents will tell you they sell commercial property. The reality is that only a few individuals and companies in any given area sell a lot of commercial property. There are some reasons for this.
- Many salespeople only do general commercial property sales and do not specialise in any particular property segment
- Database size and diversity is low offering small numbers of prospects
- Market intelligence on sales and values is poor
- Prospecting is a random event done as a last resort when things are tough
- The links between property leasing and sales is not respected and optimised
- Focus on skills and knowledge development is lacking for many individuals
This is all about knowing your property market and staying in front of the trends and needs. Commercial real estate is really a people business. The industry is built around logical decisions for both landlords and tenants. When you can provide the property logic and the right information, then more listings and commissions can come your way.
Search for Business Locations For Sale Near Me in Milnerton
Many property investors choose industrial property as their first type of property investment outside of residential property. This then shows that the first time or smaller property investors believe that industrial property has key advantages for them.
The main advantage we can see frequently is that industrial property is relatively simple and basic when it comes to property performance. It is not hard for property investors to know what to do and what to control with property rents, leases, and property maintenance.
So what could be some other elements of industrial performance that are worth considering if you were and investor and you wanted to purchase a good property or something with real potential? Here is a list to get you started.
These are the most common points of concern and focus in industrial property that we come across as we speak to many investors, tenants, and real estate agents.
- Transport routes to the property and those that are used by a typical industrial tenant must be understood. The routes must be easily accessible as a system of raw material supply and product distribution.
- Many tenants need raw materials as part of their business operation. What are these raw materials and how easy is it for the tenant to get them? Look at the access factors for air transport, shipping and port access, together with freeways and the main road networks.
- The power to the property should be of the type that industry uses. In most cases that is what we call '3 phase' or 'high tension' power. It is the type of power supply that industry needs for large machinery function. If this power is not available you will have to assess how much it will cost to get it to the property.
- Cost and supply of labour force is important to industrial tenants. Invariably they will need people to work in the business. Proximity of the industrial property to local residential areas or towns will help with a source of labour supply; however another advantage with this will be access to public transport for the employees.
- Moving the end manufactured goods to their market is quite important to the industrial tenant. Today we see reasonable flexibility with truck transport and road networks however some very heavy or bulky goods will need rail heads as a point of distribution. Rail transport still has the advantage when it comes to large volume and heavy goods.
- Industrial property investment seems to be strongest in performance around major cities with established growth cycles. Even in a slow economic cycle these industrial properties will perform given the interaction with the community and reasonable access to end markets.
- In good property markets the industrial property tends to give higher levels of return when compared to office and retail property. This is an analysis on average so the other elements of location, tenant selection, and market access are still important to the equation. The industrial property market is still robust when economic cycles are positive.
- When economic cycles change to the positive, it is the industrial property that responds first even before office and retail property.
- Leasing industrial property is basic and simple. Vacancies are easy to manage providing the property is not too special in design that limits tenant usage.
- Rents are usually on a net rent basis and the tenants normally take responsibility for the payment of outgoings. In saying that, the landlord needs to ensure that they have a sound accounting process that checks the tenant in that payment cycle. The landlord does not need or want an unpaid account and fines applied thereto.
- When the property market is active, the pre-lease market on new industrial property construction is quite strong. It is the timing of the release of newer industrial projects that needs to be carefully managed.
- Owner occupation is an element of industrial property performance that moves in cycles. Reading, developing and selling into that property market can be lucrative. This also says that the owner occupiers of industrial property will also sell out of their owned property. Real estate agents can tap into the major businesses to capture this source of new industrial property listings.
- When the property market is 'strong' the yields achieved on well positioned industrial property at sale time are usually attractive for the seller. This does say that care must be exercised in having good tenants, great leases, great location, and a well maintained property.
- Buyers of industrial property come from two sources. That is the investor market and the owner occupiers. This provides versatility in property disposal if one market segment is slower.
- Corporate investors will move property in and out of the balance sheet as the company changes and repositions itself for business advantage. Monitoring the media for such changes will give investors a source of opportunity. The process of 'sale and lease back' is common in industrial property.
- Ample car parking for staff and customers
- Good loading and turning areas for trucks
- Functional office areas that support the warehouse operation
- Generous warehouse height and entry points for trucks and storage
- Security for the premises
- Access to quality business communication systems including telephone, data, internet, and mobile communications
- Good signage at the front of the property that gives the business a clear identity
- Proximity to services such as roads, transport, water, gas, electricity, and other industrial tenants.
These elements are the most common that we see in successful industrial property. Whether you be a real estate agent, a property investor, or a business needing a building to occupy, you can start with this basic list and add your special criteria to formulate the profile of a good industrial property in your area.
Listing Commercial Property - Can You Price a Property to Sell In Offices?
"Property on ground lease" is among the most confusing phrases, even to commercial real estate brokers. There are up to 3 parties in a "property on ground lease": the business owner, e.g. Burger King, the landowner and the building owner. When you see a sale of "property on ground lease", it could mean:
1. Sale of land only. In this case, the building owner is the tenant, e.g. Burger King that has a business in the building. The tenant typically signs a 10-20 years absolute NNN ground lease with the landowner to lease the parcel. Should the tenant not renew the lease or be in default of the lease by not paying rent, the building with substantial value is reverted to the landowner. The tenant will make every effort to pay rent to avoid losing the building to the landlord. And so the cap rate for this property is about 1-2% lower than a property with both land and building.
There are a couple of possible scenarios that could lead into a land sale only:
· The business owner, e.g. a Burger King franchisee, could own both land and building originally. He then structures the sale of land only to an investor and then leases it back. He receives the tax benefits of being able to depreciate 100% of the building and fixtures. The tenant could later sell his interest in the building without the land to another investor and lease back the building.
6. Is it easy to sell your interest if the lease has a few years left? If you own the land, your interest may be hard to sell, but still sellable. Once the ground lease expires, the building owner owns nothing. As a result, this can make it quite challenging to find a buyer for the building.
7. Tax write-off's: Land does not depreciate for income tax purposes. The building, on the other hand is 100% depreciable.
8. Financing: if you buy the land portion, you should be able to obtain 65% LTV financing in today's market, just like a typical property with both land and improvements. However, it's very difficult to get financing for the building acquisition, especially when the ground lease has less than 20 years left.
Therefore, when you see a "property on ground lease" for sale, make sure you know what you are buying, considering there are many factors involved that can adversely impact/contest an investor's decision. If you're contemplating on buying the building without the land, think twice and make sure you have a clear understanding of all the plusses/minuses involved in this decision.