When you inspect a commercial property for the first time, understand the precinct around the property first. When you look at this effectively, you prepare yourself for the in-depth inspection of the premises themselves.
Look at the precinct before you look at the property and assess its potential for sale or for lease. This list will help you with the process. So let’s look at some of the big issues that need to be understood at the earliest stages of inspection. They are:
- The unique location of the property should be reviewed with due regard to access roadways, highways, services, and amenities. These will all have impact on the occupant of the property. They will also make the property more or less attractive from the occupancy and sale aspect.
- How close is the property to being obsolete? If this is a problem, a refurbishment strategy may be necessary. It should be said that a refurbishment should only be considered if the regional demographics and business community is sufficiently active and growing. If in doubt it is better to consider fuller redevelopment to an alternative or newer property.
- The age of the property will create a degree of deterioration and depreciation when compared to the price of a new property of similar size and type. When you know how much a new property is worth then you can apply a fair and reasonable adjustment factor to the subject property given deterioration and depreciation.
- Physical risks in the area need to be assessed. These are risks that can be from creeks and rivers, ground slippage, storm water, and environmental events. Many properties have been discounted in sale price simply due to the proximity to rivers and creeks due to flooding.
- The property will have a particular use which is allowed under the zoning for the area. This should be understood and optimized. The question to ask here is whether the property is being used to its fullest capability that the zoning allows. If not, then there may be future income opportunity in the waiting.
- Building codes and compliance will apply to the property improvements. Importantly the property should have no outstanding orders or notices that need to be rectified. If these things do exist, then they should be rectified and removed prior to any sale or lease promotion. If in doubt ask questions of the building authority.
- Environmental concerns and contamination is a big issue today. Engineers and experts can be employed to investigate particular properties of concern. This is a common event when it comes to industrial property. One example still existing in many properties is asbestos. If there is any doubt as to the existence of these environmental concerns or contamination, it pays to bring in the experts before the property is taken to the market. Site remediation will help improve the price that the owner can achieve for the property sale.
- Supply and demand relates to the amount of lettable commercial space available in the area. This will vary subject to the amount of vacant land and or the amount of land available for redevelopment. Both of these things create pressure on prices and rents for existing property in any precinct. They affect the investment future.
- Comparable properties exist in any market place at any time. Their location and impact on any new property listing that you are to be working on, should be identified before the campaign starts. Part of this consideration will be the time on market that they take to sell or lease. You could very well experience the same time on market unless you adopt a new and different promotional strategy. If in doubt be a better promoter of property than others that surround you.
- The intervention of government rules and regulations in any property precinct needs to be monitored. As a government or local council changes the rules and legislation in a property precinct you can see severe impact on prices and rentals. As a case in point, a council may choose to restrict parking in the street adjacent to a commercial property. If that commercial property does not have sufficient on-site parking, then it is likely that the property itself will become undesirable from a leasing point of view. Tenants will prefer to be in another location where staff and clients can park with convenience.
So these are some of the important issues to look at in any assessment of property marketability in commercial real estate. When you understand these things, you can more correctly consider the price, the rents, and the promotional strategy that the property deserves.