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What Makes The Perfect Office Property Acquisition (Part Two)

15 April, 2018
Categories: Commercial, Investments

Our experts dive deeper into the other drivers of value and tenant demand in the office market.

In last week’s post, we dissected the noticeable characteristics of the perfect office property acquisition:

  • Sufficient car parking
  • Sustainability
  • End-of-trip facilities (for non-automobile commuters)
  • Proximity to transport links
  • Cafes, urban precincts & access to amenities

While potential tenants will find these traits extremely attractive, there are other drivers of value and tenant demand which any astute investor should consider:

Divisible Floor Plan

Large enough office space gives a landlord the option of dividing the floor plan. Having this flexibility could enable your property to appeal to a greater number of potential tenants, however, functionality is paramount.

An open floor plan of 1,000 square metres will not attract a small business requiring only 350 square metres. However, splitting the space between two or three similar sized businesses may diversify your rental income and spread your risk.

If dividing a floor plan, you need to maintain functionality and availability to all tenants and ‘zones’. I.e. ensure all tenants have lift, stairway, common area and toilet access.

Natural light and aspect (north or south-facing) is also a big driver of tenant demand. The aim here is to decrease barriers and blocks to tenant flexibility, enjoyment and manoeuvrability while trying to keep your NLA as high as possible. Common areas, such as lobbies and receptions, do not appear on a tenant’s lease agreement and can eat into your Net Lettable Area.

Finding An Ideal Tenant

A smart commercial property investor will think carefully about who should be leasing their office premises.

An ideal tenant can come in all shapes and sizes but typically they must be financially sound with a reputable corporate identity and name.

Major national and international companies, for example, are likely to have a solid track record and a strong expectation of continuing that performance. This not only reduces your risk as a landlord, but also does wonders to your property value.

A reputable, large-scale business is also likely to have their performance and announcements publicly monitored and displayed. This can act as a great information source when assessing current and future stability.

Seek Out Expertise

Successful investing in commercial real estate often requires expertise, intimate market knowledge on economic drivers and demand, supply pipelines, robust relationships with those in the industry, and creativity. We believe the best way to invest in commercial property is with a syndicate, managed by a highly-experienced, ASIC-compliant company.

If you’d like to learn more about investing in office space, or any other type of commercial real estate, get in touch with Properties & Pathways.

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