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WHETHER you’re an investor looking to buy and lease property or a business owner simply renting your work premises, you need to stay up to date with developments in the commercial property industry and be aware of how the property you rent or purchase affects your competitiveness.
Anyone interested in property will know that it’s been a tenants’ market for some time.
However, investments in commercial property, particularly office and industrial space, can yield substantial returns for years - much more so than residential investments, as the homeownership market is much less stable than the commercial market.
Commercial property investments are paid off quickly, usually in a decade, and lease periods are longer.
Furthermore, when your property is tenanted and mortgage free, you have leverage to buy more.
The renting route
While business premises are a good investment, there are also advantages to leasing your work space, particularly if you’re not in a position to spend a lot on buying property.
You could use the extra money for product development or expansion - you’ll have more flexibility should you need to move to new premises, and you won’t be subject to the property market’s fluctuations.
There are a few factors you need to consider before you start looking for retail, industrial or office space to rent:
* How much space will you need?
* What facilities will you require?
* How many employees will require parking?
* Which area is the safest and most accessible to public transport routes and major roads?
These are just a few of the obvious questions one needs to ask. It is best to seek advice from a commercial property specialist to help you make your final decision.
Are you buying it?
If you’re keen on the idea of making bond repayments on your property rather than paying rent to someone else forever, you should keep some points in mind before you invest.
When you buy commercial space, you could end up paying a deposit of 50% of the value of the real estate.
However, this can be a good way to remove excess cash from your balance sheet if you don’t mind the dent in your cash reserves.
Recent reports show that the retail and industrial sectors have experienced significant gains. The office sector, on the other hand, is lagging behind.
In some regions, such as Durban’s CBD, there is an over-supply of office space causing lower rentals, and at a national level, the office accommodation sector is experiencing more competition for leasing deals and fewer transactions.
In this challenging environment, your chances of success in letting your commercial property will be greatly increased by factors like having competitive rentals, an efficient asset management team and well-maintained premises with good surrounding infrastructure.
It may be a cliché, but location really is one of the most important factors to consider when you’re looking to buy commercial property. Occupancies remain high in prime locations like the V&A Waterfront and Century City in Cape Town, for example, in spite of the high asking rentals.
It’s important to foster long-term relationships with letting and property management brokers, who can manage vacancies, retain tenants and reduce your operational costs.
“Effective use of property can increase profitability, attract quality staff, enhance your image and make your business more efficient and easy to run,” says Jason Elley, founder of Commercial Space, a commercial property leasing and management firm in Cape Town.
For most businesses, the operational costs of commercial property are usually the second highest after wages, and property makes up more than one-third of assets, and yet many companies have only a sketchy understanding of the costs.
Having strategic awareness around property is therefore crucial to the success of your business.
- Fin24
*This guest post was submitted by Jason Elle, the founder of Commercial Space Properties in Cape Town.
Add your voice to our Property Issue:
* Write a guest post
* Share a personal story
* Ask the experts
Anyone interested in property will know that it’s been a tenants’ market for some time.
However, investments in commercial property, particularly office and industrial space, can yield substantial returns for years - much more so than residential investments, as the homeownership market is much less stable than the commercial market.
Commercial property investments are paid off quickly, usually in a decade, and lease periods are longer.
Furthermore, when your property is tenanted and mortgage free, you have leverage to buy more.
The renting route
While business premises are a good investment, there are also advantages to leasing your work space, particularly if you’re not in a position to spend a lot on buying property.
You could use the extra money for product development or expansion - you’ll have more flexibility should you need to move to new premises, and you won’t be subject to the property market’s fluctuations.
There are a few factors you need to consider before you start looking for retail, industrial or office space to rent:
* How much space will you need?
* What facilities will you require?
* How many employees will require parking?
* Which area is the safest and most accessible to public transport routes and major roads?
These are just a few of the obvious questions one needs to ask. It is best to seek advice from a commercial property specialist to help you make your final decision.
Are you buying it?
If you’re keen on the idea of making bond repayments on your property rather than paying rent to someone else forever, you should keep some points in mind before you invest.
When you buy commercial space, you could end up paying a deposit of 50% of the value of the real estate.
However, this can be a good way to remove excess cash from your balance sheet if you don’t mind the dent in your cash reserves.
Recent reports show that the retail and industrial sectors have experienced significant gains. The office sector, on the other hand, is lagging behind.
In some regions, such as Durban’s CBD, there is an over-supply of office space causing lower rentals, and at a national level, the office accommodation sector is experiencing more competition for leasing deals and fewer transactions.
In this challenging environment, your chances of success in letting your commercial property will be greatly increased by factors like having competitive rentals, an efficient asset management team and well-maintained premises with good surrounding infrastructure.
It may be a cliché, but location really is one of the most important factors to consider when you’re looking to buy commercial property. Occupancies remain high in prime locations like the V&A Waterfront and Century City in Cape Town, for example, in spite of the high asking rentals.
It’s important to foster long-term relationships with letting and property management brokers, who can manage vacancies, retain tenants and reduce your operational costs.
“Effective use of property can increase profitability, attract quality staff, enhance your image and make your business more efficient and easy to run,” says Jason Elley, founder of Commercial Space, a commercial property leasing and management firm in Cape Town.
For most businesses, the operational costs of commercial property are usually the second highest after wages, and property makes up more than one-third of assets, and yet many companies have only a sketchy understanding of the costs.
Having strategic awareness around property is therefore crucial to the success of your business.
- Fin24
*This guest post was submitted by Jason Elle, the founder of Commercial Space Properties in Cape Town.
Add your voice to our Property Issue:
* Write a guest post
* Share a personal story
* Ask the experts
