Commercial Property Market on the Rise
In the last couple of weeks we’ve released lots of articles about how property sentiment about Brexit is improving. Everyone is tired of waiting and just getting on with it. This week however the numbers have caught up and the financial times reports. A 1.9% increase in the number of property transactions in March compared to February. Even more amazingly is that it is a 6.8% increase on March of last year. Read about that here. While all property is doing well at the moment non-residential property is doing even better. Commercial property has increased 8.9% since February!
Now we know why we would invest in this type of property how can we as investors get into the commercial market?
First of all, let’s get a breakdown of the commercial property market. The top performing asset is currently offices and the second is retail. An up and coming type of retail property in the commercial market are warehouses. This rise is due to the large amount delivery companies looking for storage for their products. Some active and popular examples in the UK include Amazon and Ocado. However, more applicable to us is that there are many types of retailers that need storage space including small local businesses. This gives us an opportunity if the situation arises where a property like a warehouse becomes available for a decent price. The Times recently covered this.
Another way we can get involved in commercial property is by collaborating with the business themselves. Businesses can be receptive to investors buying their properties as it injects instant capital into the business through the sale. They are then happy as they are only required to pay a small amount rent which would come out of the higher revenue your investment can generate. This obviously is dependent on getting a good tenant that invests in their own business. But if they are willing then they are guaranteed from the start of the deal.
Different spaces are suited to different businesses
Deciding on putting a property up for sale as a commercial property should also be considered when dealing with an unlivable space. The normal strategy would be to make as many flats as we can but if the demand is right making a commercial property can be viable. Obviously, different spaces are suited to different businesses. The property may even require less work. Be careful to make sure that a property is unlivable because if you change a residential property to a commercial one penal tax charges will be issued. But properties such as old pubs or shops with flats included still count as commercial properties. So it can be worth a look as the turnaround time can be much faster than with residential property.
In summary, it is important to be open to opportunity as we know commercial property isn’t as popular for private landlords. We hope this summary of current commercial news has shown that there can be great deals. Many commercial deals can be quicker and more lucrative if done properly. If you want to learn how to make money with property, then come along to one of our 3-day property courses.
For more information, please read these articles,
https://www.thetimes.co.uk/article/strong-start-to-the-year-for-commercial-property-7rw8dzx32
https://www.ftadviser.com/pensions/2019/04/10/commercial-property-can-save-your-pension/?page=4
