Its times like this that we can easily see the benefits of investing long term in Brisbane property and particularly commercial and retail property. On average, investors keep the commercial property for about 5 to 7 years; sometimes longer. After that, they know what they can do with it when it comes to diversity, enhancement, or repositioning. That is where investment strategies can bring value to a property or property portfolio
Investment changes can be in buying more properties, and or to
sell, develop, or refurbish. Some property
owners use the capital gain from their investments over time to refinance or
improve their portfolio. Commercial and
retail property is interesting and sometime challenging. It is supported by business sentiment and
local area demographics.
Investment Strengths and Weaknesses
Certainly, mistakes are made by some investors (as in all
investments) but the retail and commercial property market remains a solid
investment vehicle over time for many astute investors. Why is that? It is not hard to understand; it
just takes a bit of knowledge and ongoing market research. The returns from commercial and retail property
are generally better than residential property over time although the higher cost
of the asset class can delay some people from entering the market.
Know Your Location and Property Types
What can you do with this in Queensland? Do your research into the property types and
see what appeals to your plans. Find a
good real estate agent that knows the location, the property types, rents,
prices, and the changes of activity in a location. Here is a checklist to help you do that:
What property types do you know something about?
Can you focus on quality investment property in
Have you visited your bank or financier to assess
your lending position?
Can you hold your assets for the longer term or
are you a short-term holder?
If you need help with any of these concepts in Brisbane or
Queensland, contact Specialist Commercial Agent, John Highman on 0417221108
When you own commercial property or retail property in Brisbane
or Queensland, the leases that reflect the tenancy mix are the foundation of
the cash flow. In many respects it is
the cash flow that attracts other investors to the property when a sale is forecast.
Then when it comes to selling that property it is the leases
and the cash flow that will drive buyer interest and ultimately assist in
getting a better price for the property.
So, the best idea is to negotiate your leases carefully with due regard
to the future of the property and your investment targets. Ask plenty of questions.
What About the Tenants?
Another thing to remember here is that not all tenants are
good tenants. You must look at a tenant
comprehensively before the lease transaction is accepted. The things to review with a tenant occupancy
Where they are coming from
Lease history from other locations
Landlord comment from other locations
The tenant’s ability to pay the rent for the
The existing cash flow from the property
The incentive that the tenant is looking for
A property with a good lease profile will create property
investor interest; it’s that simple. It
then stands to reason that the lease negotiations that occur in your property
should be carefully planned and optimised.
You never know when you want to sell or refinance your property. The leases that you have in existence will be
the attraction to support your marketing processes and investment needs.
Look at the Leases and the Overall Tenant Mix
So, what can you do here as a property investor? Look at all your leases and the broader
tenant mix. Set some rules and standards
about these things below and then see a good solicitor to help you with the
Rent review timings and standards
Make good provisions
Lease terms and conditions
Ideal tenant type and operations
When you make every lease count, the property starts to take
on a whole new level of performance in its asset class.
So many landlords today in Brisbane and in Queensland negotiate a lease agreement with a tenant and do not think deeply about the elements of any lease to be created. They just leave the lease to their property solicitor to formulate.
Certainly solicitors know what to do in creating a lease,
it’s just that they do not always know much about the property in
question. More often than not, the
solicitors working on the lease documentation will have not seen the property
at all. That then leaves the opportunity
wide open for a lease document to be prepared that does not specifically match
the uniqueness of the property.
Retail Properties are Different
When leasing office or industrial property the terms of a lease can be fairly standard, but when it comes to retail property the lease should be specially structured for the investment plans of the landlord and the function of the property.
Retail property is very much a vibrant and active type of investment. Things can happen at any time involving tenants, landlord, or customers. That is where a good property solicitor will review the lease, match it to the needs of the property, and then balance that with the investment plans of the landlord. Proof of this fact is that most large properties will have a special lease formulated by the solicitor acting on behalf of the landlord.
At times like this there are significant changes going on in
the commercial property market in Brisbane, and many opportunities around. If you have spare funds available to put into
the purchase of a new commercial property, there is no doubt that good
opportunities exist. It’s a matter of
what you are looking for and how much you can spend.
There is a balance being reached between sale and purchase; it’s
a process of cycle and value. The buyers
can be selective, the sellers must be realistic on price outcomes, and the
available funds to transact a sale are less available than say 2 years ago. The
banks and finance groups are more selective on loads and loan qualification. First time buyers of commercial property need
to provide a good financial history and a strong net worth position that underpins
the loan position.
What is a Property Cycle in Commercial?
This is a property cycle and we have seen it before; after
years of high demand and high prices, the values reach a level where buyers are
more selective and slower to react. In
saying that, a quality property will always attract attention; it is just a
matter of what price can be achieved.
So many people have said that ‘timing is everything’ when it
comes to property investment; today is a case in point. Now is a good time to purchase given that
some buyers are more restricted with funds access and may not be able to move
on even the best of properties.
Well positioned buyers and property investors are in one of
the best of markets right now. They can
pick and choose the properties they like; they can strike a reasonable bargain
without being too eager or pressured into a transaction.
Things to Look for in Investment Property
So, what should you look for in the property market and with
commercial or retail properties? Try
some of these things to monitor in your preferred investment location and or
property. Properties with:
Good tenant profiles and companies or tenants of
Good tenant mix that balances customer interest
and business sales
Great location for ongoing business
Solid lease documentation that supports the
investment factors in the property
Low threat of vacancy over the coming years
A history of solid income growth and low risk of
income loss in the future
Good controls on expenditure and budgets to support
Long term anchor tenants of stability and
So why would a property investor sell one of these great
investments? Simply because right now
many property investors must sell; they must reposition their financing and
larger portfolio. This is a great
opportunity for those that can buy commercial and retail property. Timing is a good leveller for those that can
wait for the cycle to come back. Right now,
it’s back; it’s a buyer’s cycle in commercial property. It is a good time to invest in commercial and
retail property right now and over the coming 12 months.
Many property owners in Brisbane think that they can manage their own property and some invariably do, albeit at times poorly. It’s a common problem. There are just too many things in property performance today for most situations of owner management to be completely successful.
Many owners of investment property make property management choices based on cost first and legality or practicality second; that then leads to risk, redundancy, and low-grade investment performance.
Costs of Property Management
Are the cost savings in self-management worth the trouble for a landlord? Perhaps in a simple single tenancy management the owner self-management process might work; as however, a property becomes more complex with several occupants and or leases, a professional property manager is a better solution in most cases.
There are plenty of agents around with property managers on staff, however that is where another problem evolves; the experience of the property manager may not be relevant or deep enough for the particular property type and or client.
Challenges of Property Management
Let’s take things a bit further. There are always challenges in commercial and
retail property management. Think about
these things for starters:
Negotiations with difficult tenants on leasing
and occupancy matters
The gathering of comparable market evidence from
other leased properties
Strategic tenant retention and lease negotiation
Vacancy marketing to reduce the problems of loss
There are differences to consider in office,
industrial, and retail property management
There are other things to add to the list. Rarely will a
property owner have enough exposure to the local property market to really
understand what comparable situations, vacancies, rents, and prices are
The property owner can also make mistakes with lease and
tenant matters simply because of a lack of understanding when it comes to up to
date lease interpretation, and full property market information.
Things to Look for in Property Management Today
Here are some other key elements of market intelligence that
are critical to the property management process.
Latest updates on property types and market
rentals for comparable properties.
Access to a local business database of tenant
enquiry across property types.
Knowledge about lease incentives in today’s
market and how they impact a new lease deal
The ways that a vacant tenancy can be marketed
for best enquiry and lease occupancy
The different situations of gross and net rental
that can bring benefits to the landlord and their investment situation
How to qualify tenants in the current market. Some tenants will not share their full
business details and or lease requirements.
Knowledge about levels of outgoings in the local
area and how they are structured into new leases today
So, there is a message here. A good property manager or real estate agent with a large team will understand these things and help the property owners appreciate what is possible with the investment property; that will then allow strategies to evolve.
An experienced property manager or leasing expert will also make clear recommendations about how to minimise the risk of vacancy and the time on market with existing vacancies. Its all about strategy and experience.
When occupancy is sorted for the property owner by a chosen property
manager, the other issues of property performance can be escalated into a
strategic property plan. Those issues
will be prioritized including:
Lease documentation review
Tenant meetings and interviews
Property handover checklists
Critical date assessments over the coming leases
and investment cycles
Income and expenditure reviews for budget
Maintenance planning to allow property
compliance and safety planning to codes
Vacancy reduction plans
Tenant retention plans
Refurbishment and capital works programs
So, there are plenty of reasons for a property owner to seek
outside assistance in managing their property; it’s worth the money and the
fees paid. The only question now left to
investigate the is if the property manager has the experience and the business
disciplines needed to control the asset efficiently for the future.
When your property becomes vacant it can be a real worry. It is the same for any landlord in Brisbane and in greater Queensland. As the online pressures shift and change, the way companies transact business today has a direct impact on property occupancy, be that in leasing or ownership.
Why is that? Companies
today are more ‘mobile’ and the sales force can spend most of their time out of
the office. Everything that they need to
create new business, or place and order is typically in the ‘cloud’. The size of average office premises for a given
today is smaller than what it would have been five years ago.
So, that then presents some problems. In precincts and property locations it can take some time to find a new and willing tenant that has the integrity and business stability to occupy a property. That leasing process means loss of rent, loss of outgoings recovery, incentive costs, legal documentation costs, commissions in leasing, and the list goes on.
Market Coverage is Important
A good commercial real estate leasing agent that has a solid coverage of the local property market can be of great value to a landlord today.
So, what can you do as a landlord with your investment properties? You must stay ahead of the vacancy problem and have a good strategy in place to minimise the vacancy downtime.
Even in tough markets, vacant tenancies do lease, it’s just that it takes more time and effort on the part of the agent and or the landlord to promote and target the property to the right prospective tenants.
A ‘tenant retention plan’ is a good solution for most
investment properties. In a ‘retention
plan’, specific strategies are created such as:
Closer connections with existing tenants to
ensure full awareness of leasing pressures and business changes.
Creative lease transactions that are designed to
match the overall mix of the property whilst avoiding mass or multiple expiry
problems with several tenants or premises at the same time.
Targeted tenant profiles of local businesses to
simplify the leasing process when a vacancy is known to be happening or
Direct marketing of vacant space early, so that
enquiry is optimized for vacancies at the right time.
Incentive packages that are structured to
encourage existing tenants to stay in a property. There are different incentives available, and
a package or alternative packages can be created to suit investment targets in
A forward matrix assessment of all tenants in an
investment property to allow lease expiry awareness and early negotiation. That matrix is typically a forward-looking
assessment of occupancy looking out to 18 months from current time.
Leases that are matched to the investment
targets of the landlord and the valuation requirements of the property
As a landlord, and if you have premises to lease, do not
make your choice of leasing agent based on discounted commissions, lower fees,
low marketing costs, open listing, or friendship. None of these things will really help you
lease your vacant tenancy any faster.
The result is an expensive and protracted vacant tenancy that is ‘eating
its head off’ financially in vacancy downtime and costs. Your losses will far exceed any gains you
think you may get from savings on commissions or fees.
What are the Property Strategies?
When you need an experienced real estate agent to help you
lease a retail or commercial property, or any property for that matter, ask
them to give you their strategy on:
Advertising to a target market that is relevant
to the vacant property
Internet listing initiatives to attract more
Track record leasing similar local property
Lease terms and conditions that attract tenant
Database email circulation of your vacant
property for lease
Cold calling the business community to attract
enquiry from the right business owners
Street by street canvassing of businesses for
greater information about your vacant tenancy
Signage initiatives that show the vacancy to its
Target marketing the property locally
Inspection strategies designed for your property
Such a short list and some yet critical points that are so
important when you are leasing property or seeking to resolve vacancies. You can do so much with these things from a
leasing perspective providing your commercial real estate agent supports the
process and provides the depth of experience to get the job done.
One final comment and going back to one key point above;
open type listings in a tough market are also a waste of time for the average
landlord. The numerous agents that have
your property listed as part of an ‘open listing’ are not really marketing your
property intensely. It is what is called
a ‘list and hope’ process when it comes to open listings.
Proven Agent Performance
If you want to lease your property in the shortest possible
time, find an agent that has real proven experience in the local area using the
8 points above. Ask questions about what
the agent will do for you. Get them to show
you how they will attract the market to your property. Make them win your business. Good real estate agents will do this and give
you the confidence you expect as a property investor.
I go back to the point that leasing a commercial or retail
property is not about getting discounts from the chosen agent. It is all about market coverage and strategic
approaches to the right local businesses.
A timely lease agreement is more important than any ‘discount’.
When you list your property for sale or lease in Brisbane,
one of the questions that you will be asked by the nominated brokage agent, is
if you want a signboard on your property.
I highly recommend a signboard for one very good reason; it is so
effective in immediately tapping into the local property market.
Brisbane is a vibrant and active city on the Australian eastern seaboard. It is becoming a ‘gateway’ of products and services into SE Asia. People interested in local commerce drive through the precincts constantly. It is a property investment ‘hub’.
The seaports and airports in Brisbane are surrounded by
industrial and commercial properties serving commerce and manufacturing in
Queensland. The precincts of Eagle Farm,
Newstead, Port Brisbane, and Tradecoast, are all thriving precincts are also
supporting businesses trading internationally through sea, air, and road
So, the signboard on your property is quite important. There are people in and around your
commercial investment property that want to know about the sale or lease. Use the signboard to connect with them.
Important Property People
Who are those people?
For starters they will be:
Nearby business owners
Local tenants that may need to expand, contract,
or relocate premises
Investors seeking to expand or change their
Very often when a signboard is placed on a property in
Brisbane, the phone starts to ring within a few hours. The local businesses and the local property
investors will see the signboard and invariably want to know what is going on
with the property. They will consider
your property from their perspective with their needs in mind, and that is what
The signboard is therefore one of the cheapest and most
effective methods of marketing a property that there is. Add to that the convenience of the available
internet advertising today and you have a basic marketing campaign for your Brisbane
property at low cost.
Value for Money in Property Marketing Today
Where is the value for money in marketing commercial real
estate today? Consider these questions:
What does a signboard cost? A few hundred dollars for a generous
signboard. The signboard is a silent
promoter of your property in an ongoing way.
What does the internet cost? Can be a few hundred dollars to a few
thousand dollars, depending on advert placement, size, and message. There is long term value in internet-based
It is interesting today to remember that newspaper
advertising for commercial and retail property is less effective and still very
costly. Most people that want to sell,
purchase, or lease a local property will go to the internet first and will see
the signboard as they travel through the local area.
Advertising your property for sale or lease does not have to
be expensive or complex. Simple
marketing with effective channels of marketing is all that is required.