The commercial property market can be a very lucrative business. The following steps will help you make the most of your investment:
1. Expand and enhance
The obvious way to add value to your property is to expand the site and enhance its exteriors. It is important to research what type of space will benefit your property the most, such as parking, storage, conference space or storefront.
The exterior of your property needs to be up-to-date, or at least comparable to surrounding buildings in terms of quality and aesthetics. As owner, you will also be responsible for any repairs and maintenance. If you do not maintain your property from the outset, you may end up facing service charges when selling, and your negotiating power may be weakened if new owners need to carry out repairs.
Before you carry out any construction work, consult with your local authority as planning permission may be needed. You will usually need approval if you are building something new, changing the use of the building, or making major changes such as an extension.
2. Monitor and modify
It is wise to always be aware of what is going on around you. Like residential property, value is directly related to the environment or community in which the property is located, so check out the buildings nearby and ask yourself:
- Are the properties changing their use and is this to their advantage over yours?
- Are new types of occupiers coming into your neighbourhood? You don't want to be the only financial business in a growing technological hub as it will be harder to sell in the future.
- Are there living quarters?
- Will you need to invest in security upgrades such as gates, shutters and alarm systems?
- Have other buildings carried out extensions?
3. Tenants and treasure
Existing tenants are an important factor. A high-quality tenant with a good credit history, a track record of regular payments and a long lease ahead of them will naturally increase the property's value, as this not only suggests that the property is in demand, but that income is secure.
In order to keep your property occupied, you could consider asking for low deposits and offering existing inhabitants the incentive of discounted rent or a finder’s fee, if they refer new tenants. Property managers can also be employed to take on the responsibility of maintaining tenant levels.
When there is high demand, and a shortage of desirable properties in a certain area, the balance of power shifts to the owner. If selling, you can sit back and wait for offers to exceed the minimum asking price, or if you are leasing the property, the amounts you can charge tenants will rise.
2017 has seen a strong recovery in demand for commercial property in London and this looks set to spread to other regions.
4. Awareness and assets
When looking to develop your property, make sure you are aware of current trends in the market and legislation. You do not want to over-capitalise on a property during a market down-turn, unless your investment is long-term and you can afford to wait for an upward trend. Seek professional advice whenever in doubt: accountants for tax advice, solicitors for legal issues and planning advisors if you want to know if it is the right time to enhance your property. This way, you will avoid losing money on your investment.
Other tips to consider are giving your property a name to give it some character, adding energy-efficient improvements such as solar panels and loft insulation, and updating the signage so buyers will know the true purpose of your property.