Buying Commercial PropertyWhen buying commercial property it pays to shop around and buy well. To do this you need to do your homework and understand the market, what the trends are and what your objectives are in purchasing a property. Commercial Real Estate is highly favoured for its returns when it comes to property investment, but you still need to do your research and have a competent team to help.
Buying commercial property in New Zealand is relatively straight forward, either as an investment or for your business. In many cases commercial properties can be purchased with tenants and leases in place. In New Zealand tenants are usually liable for the repairs and fit-out. They are also usually liable for utilities, rates and insurance.
Before buying Commercial Real Estate you need to consider your objectives and long-term goals. Develop your selection criteria and ask around to find suitable experienced professionals that can offer you sound legal and financial advice for getting your investment right. The following points will help:
Identify the right property when buying commercial real estateThere are a number of factors to consider when looking for suitable commercial real estate to buy:
• Location is number 1. This is true for commercial properties just as it is for residential. You may want to be close to customers, workers and suppliers. Depending on the type of business, access to motorways and ports may be important. And what about the neighbours?
• Building’s condition. Is it in a good state of repair, does it comply with the necessary codes and standards? How has it been used, are there any environmental issues, such as asbestos? Is the construction energy efficient and a good bet for future use?
• Allowable uses. Does the zoning and design suit your needs, be it for your business or as an investment? If your business is a law firm, you’ll need commercial office space. If you are a manufacturer, you need an industrial space.
• Limitations on alterations. Whether due to zoning, building codes or covenants, there may be limits to internal and external alterations you can make to the property. It could be an historic building with restrictions to the facade, or may need to comply with a cluster of other properties.
• Access and parking. Make sure your customers can park, and take into consideration whether access is compliant with laws around disability access etc.
• Expansion or leasing options. Has it the potential to expand? This could be an upside – if you don't need all the space, can you sub-lease out the extra space?
Finding a commercial propertyMost of the larger real estate agencies offer commercial property listings and usually have specialist agents to handle these. There are also a number of specialist commercial property agencies and websites. Check out sites like nzcommercial and search their commercial properties for sale.
Use a team of experts to helpMost Commercial Property purchases are not by experts, so it pays to surround yourself with those that have experience in this field. Consider using:
• An accountant can help you figure out what you or your business can afford and evaluate tax and operating budgets and benefits.
• A lawyer can help you check the terms, complete the transaction and help in negotiations with the seller and / or lender. They can also advise on the best ownership structure for the purchase.
• A real estate agent can help you identify potential properties that meet your requirements in the area and price bracket you can afford.
Conduct due diligence before finalising the purchaseOnce you have found the right property that meets your criteria, you make an offer and on acceptance go to contract. The Offer - when making an offer consult your Lawyer, and make it subject to certain conditions, such as arranging finance, the approval of the terms and conditions and possibly the tenant’s lease. You then commence the due diligence process during which you do your homework to make sure it all stacks up as suggested.
• Consult with your trusted advisors – they play an important role here.
• Engage property specialists. You may also need to bring in additional parties such as engineers and property appraisers to help verify the condition of the property, its prior use, and any potential liability issues, be it structural soundness, electrical wiring or plumbing issues.
• Check out the town planning and adjacent properties that could have a negative impact on the property’s value.
• Obtain a Land Information Memorandum (LIM). This is a comprehensive report containing everything the local council knows about a property or land.
• Also confirm your insurance options, costs and conditions.
If you find any problems, you may need to renegotiate or choose to walk away from the deal.
Before committing to purchase any commercial real estate seek professional advice, and review your long-term goals to ensure you identify the option that best suits your needs and desired return on investment.
Check out our Commercial Property Listings:Commercial Property for sale Auckland
Commercial Property for sale Wellington
Commercial Property for sale Christchurch
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