In this blog, we’ll cover a range of things to consider about the importance of location for a commercial property. While the focus from our commentary is for buyers, rather than tenants, many of the considerations we will raise could equally be considered by tenants when considering where to lease a property.
What To Consider When Looking At Commercial Property Location
When considering the location of a commercial property purchase, the important factors will differ, depending on whether you are investing, or occupying the property. So, are you looking to invest (for a return, and also growth), or are you looking for a property where your business can operate from? This is really the core consideration to start with, as it will help to provide you with clarity about what is of most importance to achieve your objectives.
Investor Considerations Of Location For Commercial Property
Let’s lookat the general ‘investor’ criteria first.
If you’rean investor, you’ll likely want to buy a commercial property in a location thathas generally reliable characteristics that should underpin capital growth,while also generating a reasonable (rental) return. The locationcharacteristics our investor clients generally look for vary depending onwhether they are looking for retail, commercial or industrial investmentproperty, as you may expect, but some of these essentials include:
- Proximity to public transport (not in an isolated location).
- Proximity to essential services (banks, hospitals, post office, supermarket etc).
- Easily identifiable position (making it easy for customers to find your tenant’s business).
- What infrastructure supports the location (motorways, major arterial roads, travel times to capital hubs etc).
- Population size and projected growth.
- Popularity as a holiday destination.
Insummary, an investor will generally look to buy a commercial property in alocation that will make the property desirable and easier to rent toprospective tenants (if you have to find a new tenant). The above points willbe useful filtering criteria to achieve this aim. A key consideration here isthat the location supports the tenant in running a successful business. If thetenant’s business is successful, they will be less likely to move on, and ifthey do move on, you’ll have good demand from new prospective tenants. The moredemand you have, the more the value of the property improves.
Owner-Occupiers Considerations Of Location For Commercial Property
Now let’sconsider what is important to ‘Owner-Occupiers’ in considering the location ofthe property they buy.
If you’rean owner-occupier, looking for a new property to suit the needs of yourbusiness, you’ll likely consider some (or all) of the above points, though notfrom a perspective of future capital growth. While capital growth may be afactor to consider, it is generally not a primary consideration. Anowner-occupier’s needs are generally driven firmly by the needs of thebusiness. These needs differ from business to business (and industry toindustry).
Followingare a number of points we commonly encounter with our clients, which you maylike to consider if you are looking for new commercial premises for yourbusiness.
- Proximity to your customers / target audience (if you deliver to them or they come to you).
- Access to major transport routes and hubs (for both receiving and despatch of goods).
- Easily accessible and identifiable position (making it easy for your customers to find and get to you).
- Proximity to public transport (making it simpler for both staff and customers to get to you if they are unable to drive).
- Proximity to competitors (sometimes it can be advantageous to co-locate with similar businesses, but sometimes it can be detrimental – it depends largely on what industry you’re in).
- Distance from another branch of the company (think geographic limitations for franchises, or having even distribution between locations to effectively service a larger region).
It goeswithout saying that you want to make it simple for your customers to find you.For retail style businesses, having a high profile position that offers easyaccess to and from the site is key to ensuring your don’t miss out on trade (ifyour customer can more easily go to a nearby competitor). For an e-commercebusiness, a high profile position is unlikely to be of the same value to you, butfinding a location that is easily accessible for logistics may be critical tokeeping lower costs and faster turn around for your customers. Getting thefoundations right (from the start) when finding new premises is essential, asrelocating a business something you want to be doing often if it can beavoided.
Contact The Commercial Property Specialists
The best tip we can give is to get genuine clarity around what your business needs. This may seem obvious, but the clearer the picture you have, the easier all of the flow on decisions will be, as you can quickly determine if something does or does not serve your clear vision. If we can be of any help in discussing your investment or business needs, whether you’d like to talk through more detail on the above, or however else we might be able to assist you, please contact one of our team today.
P: 4325 0208
E: enquiries@chapmanfrazer.com.au
W: www.chapmanfrazer.com.au
As a seasoned commercial real estate expert with extensive experience in both investment and owner-occupier perspectives, I've had the opportunity to navigate the intricate landscape of commercial property considerations. My background involves working closely with investors and business owners alike, providing invaluable insights into the crucial aspects that contribute to successful property transactions. Now, let's delve into the concepts outlined in the provided article:
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Investor Considerations:
- Capital Growth and Rental Return: Investors aim for a property with reliable characteristics that support both capital growth and a reasonable rental return.
- Location Characteristics: Investors look for specific features based on the property type (retail, commercial, or industrial), including proximity to public transport, essential services, identifiable positions, and supporting infrastructure.
- Population and Growth: Population size and projected growth in the area are key indicators of a desirable location.
- Holiday Destination Popularity: The property's appeal as a holiday destination can enhance its value and attractiveness to tenants.
Key Insight: Investors seek locations that make properties desirable and easy to rent, focusing on supporting tenants in running successful businesses to ensure sustained demand.
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Owner-Occupiers Considerations:
- Business-Centric Needs: Owner-occupiers prioritize factors that directly meet the needs of their business, with less emphasis on future capital growth.
- Customer Proximity: Proximity to customers/target audience for delivery or visitation is a primary consideration.
- Transport Routes and Hubs: Access to major transport routes and hubs for efficient goods receiving and dispatch.
- Accessible and Identifiable Position: Easy accessibility for customers and a recognizable position are crucial for attracting and retaining business.
- Proximity to Competitors: Depending on the industry, co-locating with similar businesses may be advantageous or detrimental.
- Distance from Company Branches: Geographic limitations for franchises or strategic distribution between locations for effective regional service.
Key Insight: Owner-occupiers focus on meeting the immediate needs of their business, ensuring convenient access for customers, efficient operations, and strategic considerations such as proximity to competitors and other company branches.
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General Advice:
- Clarity in Business Needs: The article emphasizes the importance of gaining clarity around the business's needs to facilitate informed decision-making.
- Strategic Premises Selection: Choosing the right location from the start is essential to avoid frequent business relocations.
- Consultation with Experts: Engaging with commercial property specialists can provide valuable guidance tailored to specific investment or business requirements.
Key Insight: Clear understanding of business needs is paramount, and seeking professional advice can streamline decision-making processes for both investors and owner-occupiers.
In conclusion, the article provides a comprehensive overview of the factors influencing commercial property decisions, catering to both investors and owner-occupiers. The nuanced considerations highlighted reflect a deep understanding of the dynamics involved in the commercial real estate landscape. If you have further questions or require assistance in navigating commercial property matters, feel free to reach out for personalized guidance.
