The commercial property investment market is complex and ranges from small retail outlets to large corporate headquarters. Demand for sale or rent is more restricted than for residential properties, so buyers should be aware of this.
The value of the acquisition depends on a number of issues and the type of property concerned. These include location, condition, suitability for proposed use and quality of fixtures and fittings. All these factors will influence potential tenants and the possibility of re-letting, should the need arise.
Better properties will attract better tenants. Those tenants will be more willing to enter longer-term leases and less likely to insist on break clauses.
The buyer should not need to totally rely on the income. Voids may occur and resources will be needed to meet costs.
In addition, the economy will be crucial. In times of recession where liquidations increase, tenants will be lost and, in such circumstances, the chances of finding a replacement are limited.
The commercial market offers a good low to medium risk while providing a long-term, tax-efficient home for your client’s money. It is an obvious option when the residential market shows signs of weakness but requires significant research.