Property Investment Sales

Office and warehouse spaces are usually large properties that come with expensive price tags, making office and warehouse property investments a significant component of worldwide real estate portfolios.

 

What are the benefits of investing in offices and warehouses?

Commercial property such as office and warehouse space presents investors with the opportunity to earn substantial profits, largely because it is more affordable for a business to lease or rent a commercial location rather than buy it. Other advantages include:

• Office and warehouse property investments often allow for long leases with high rent.
• The maintenance of commercial properties is usually more professional, leaving the leaser with fewer expenses.
• A high return on investment (often more than 8 or 9%).
• In prime locations, rent can be increased by 3% or 4% per year, guaranteeing higher future returns.
• Office and warehouse space in prime locations will always be in demand. This means that you can count on good resale value in the future.

 

Tips for investing in office and warehouse property

As they say in the property business, “location, location, location” is everything when it comes to making an investment in the commercial property market. Put yourself in the position of a business owner looking for an office space or warehouse: you want to have all the resources and amenities you need close at hand. To find the right kind of location, you need to conduct significant market research to find properties that best suit the bill. This will involve some communication with relevant real estate agents who can use their databases to help you. Investing in a prime office or warehouse location means that the property will always be in demand and your investment is likely to be a profitable one.

Before you start looking for properties, however, you need to decide on how much you are willing to spend as this will limit your choices and help you to refine your search.

Once you have found a number of suitable properties within your budget, you need to do the math. Compare the asking price against the returns you expect through lease (be sure to minus the costs of maintenance and taxation). If you are buying the property with a mortgage loan, you will need to factor in the loan instalments. If the property shows favourable returns then you should consider buying it.

To make a successful investment choice, you need to take into consideration the metropolitan location, micro-location and product type.

In terms of the metropolitan considerations, selection of area should take into account the actual location as well as the location’s potential for rental growth. The office or warehouse you choose to invest in should not necessarily be in the most prominent current location, but potential for development of the area needs to be taken into consideration.

Trends indicate that metropolitan areas that are or are developing into distribution hubs for the region are favoured by businesses, as businesses are looking for more efficient and cost effective ways to manage their inventories.

When it comes to micro-location considerations, look at factors such as proximity to freeways, airports, and density of consumer, labour and manufacturing concentrations. Industrial park locations have also become attractive investment options and access to worker amenities such as public transport, restaurants and other facilities is also a plus.
The final consideration is the type of product and the target market of your renters. Highly competitive and well-established firms will usually be the most demanding of the warehouse or office space and will usually require the best technologies and operations. On the other hand, evolving firms may not necessarily need high tech warehouse or office solutions, but will rather focus on the functionality of the space and what it can do for them.

For a real estate broker that specialises in office and warehouse properties in Gauteng, try RCP Brokers, who have over 3000 spaces available in the Gauteng region.

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