Retail commercial property is a broad category and includes everything from shopping centres, shopping strips, buildings for cafe’s, osteos, beauty and nail studios, supermarkets, restaurants, an architectural studio, a yoga studio or gym. There are a wide range of uses and generally business-to-consumer focus. For the purpos of this post, let’s keep retail to sites on the city fringe, suburban or regional shopping strips.
Buy in an area that has diverse thriving businesses. Businesses that are established and doing well will create a great ecosystem of clients, customers and revenue.
Check the local council - maybe even state-wide info on any changes planned for the area including traffic, zoning, parking, infrastructure - anything that will affect, encourage or deter customers from accessing the property.
The lease plays a big part in the value of the property. Generally speaking, if the site is vacant you can purchase at a more competitive rate, but you will need to consider holding costs while finding a tenant. If there’s a tenant in place, check the lease with a commercial property lawyer. You want to check the operators of the business, length of lease, how long they’ve been operating and rental comparison. This requires a separate post altogether - make sure you have good guidance in checking through the lease and if it falls under the Retail Leases Act, you need to be aware of how this may impact you as the landlord.
Buy a good quality building. Do your diligence on the age and condition of the building. If it’s strata, check body corporate notes, particularly for any waterproofing or cladding issues that need to have been rectified. Unless you have the appetite and it’s part of your strategy, you may be paying for costly repairs or compliance upkeep (fire and safety)
Buy a site that will have a diverse use, including the area you're buying in, the type of tenants the building attracts and the type of businesses. The more demand for your area and property, the higher the rental asking price, the capital growth and the lower the vacancy period.
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