Five ways to maximise returns on a commercial property sale
As more and more investors turn to commercial property for its high returns, API Magazine shares five secrets to the successful sale of a business premise.
The Australian commercial property market has been experiencing steady progress over the years, fuelled by consistent economic growth and a booming real estate sector.
In this dynamic landscape, property owners are constantly seeking strategic ways to maximise their returns on investment. To remain competitive and capitalise on such opportunities, it is crucial to evaluate various methods that can increase property rental values, lease lengths, improve property conditions, expand net lettable areas, and employ sustainable energy systems like solar panels.
Here are five key strategies that can significantly benefit investment strategies in commercial property in Australia.
1. Increase rental values
One of the primary goals of commercial property investors is to generate a consistent and growing rental income stream.
Achieving higher rental values can pave the way towards greater returns and a stronger financial footing.
To achieve this, property owners need to focus on offering improved facilities, state-of-the-art technologies, and modern architecture that cater to various tenants’ demands.
Providing amenities like high-speed internet, advanced security systems and convenient shared spaces can attract high-quality tenants who are willing to pay premium rates for such services.
Moreover, conducting regular market assessments and staying informed about ongoing rental trends can allow owners to adjust their prices accordingly, ensuring optimal growth in rental revenues.
2. Increase length of leases
Ensuring long-term tenancy is another contributing factor to maximising sale price or valuations in general.
Longer leases offer security and predictability in rental income.
To encourage tenants to sign extended leases, property owners can offer competitive packages such as flexible rent increases, rent-free periods, or fit-out contributions.
Another effective tactic is to foster strong relationships with tenants and maintain open communication channels to address issues promptly.
By demonstrating trustworthiness and maintaining a positive environment, landlords can build lasting ties with their tenants and ensure a stable income for an extended period.
3. Renovate properties
Renovating commercial properties can significantly increase their value and attract a higher calibre of tenants.
Undertaking upgrades such as redesigning office spaces with open-plan layouts, incorporating energy-efficient lighting, and installing modern HVAC systems can result in considerable improvements in overall property performance.
Renovations aimed at enhancing accessibility and adhering to building standards and regulations can foster a sense of safety and inclusivity for prospective tenants.
By staying up to date with current design trends and renovating properties to meet tenants’ expectations, landlords can increase their property’s potential and boost valuations or the sale price.
4. Increase net lettable area
To optimise earnings, commercial property owners should also look into expanding their property's net lettable area (NLA).
Maximising NLA can contribute to a higher total rental value and accommodate a broader range of tenants.
Potential methods of expanding the NLA include reconfiguring floor plans to allow for better space utilisation, incorporating mezzanine floors, and exploring vertical expansion possibilities within relevant building codes and regulations.
Property owners might also consider conducting feasibility studies to identify the most lucrative options for increasing rental spaces when planning property renovations or upgrades.
5. Add value with solar panels
The implementation of sustainable energy solutions, such as solar panels, has become increasingly essential in the commercial property market.
By installing solar panels, property owners can lower a building’s carbon footprint while offering tenants access to cost-effective and environmentally friendly energy sources. Consequently, this could result in increased property values and attract more sustainability-conscious tenants.
The integration of solar technology can help property owners secure government incentives or tax benefits, enhancing overall profitability.
In the ever-evolving Australian commercial property market, owners must adapt and implement innovative strategies to stay ahead of the competition.
By investing in improved tenant experiences, expanding rental areas, renovating properties to meet modern demands, offering incentives for longer leases, and employing sustainable technologies such as solar panels, commercial property owners can secure higher rental incomes and elevate their investment profiles.
Ultimately, the proactive application of such approaches will solidify the Australian commercial property market’s long-term resilience and prosperity.
