When you are looking at listing a commercial or retail property for sale, it is important to know what the outgoings are for the property and just how they compare to other properties in the same general location.
There is no point in taking a commercial property to the market if the outgoings require adjustment or analysis. An astute buyer will ask questions of high outgoings and you will need to have your answers ready.
If you specialise in a property type, you will find it easy to relate to outgoings and operational costs in a commercial, industrial, or retail property. Get to know the averages that apply to the properties that you act on in sale or lease.
Here are some categories that apply to the expenditure analysis in commercial property today.
- Council rates for the property will take up a large percentage of the operational costs for the building. They are usually based on a pre-determined value of the property. Check out the rates, when they were last updated for ratings purposes, and compare the rates to similar properties in the same location.
- Water rates will be a charge on the property and there may be extra costs of excess water. Given that water is a critical component of property occupancy, check out what water saving initiatives are active in the property.
- Land tax or similar property ownership tax will be something that could apply to property ownership. The question will be if the tax is a recoverable item under the leases with the tenants.
- Insurance costs for the property can be a recoverable item under the lease. Check out the relationship between the tenants and the landlord when it comes to property insurance and liability.
- Air conditioning and energy consumption are typically high costs in property occupancy. Modern properties will have some energy savings devices and strategies that help with expenditure costs for the tenants. Ask questions about the systems that get to the facts about common energy and tenant consumption of energy.
- Security in a property can be of prime importance to the tenant and the way that they use the property. Understand how the security in the property operates and who pays for that.
- General repairs and maintenance will occur with every property. The fact remains that the costs of this category should compare with other buildings of similar type and size.
- Lifts and escalators will consume a lot of energy in the property as well as contribute to the operational plant and machinery costs.
- Essential services code compliance for such important issues such as fire prevention, air conditioning, and other safety equipment costs should be reviewed to ensure that the property complies with the required codes that apply to its construction and use.
- Capital expenditure should be removed from the operational costs of the building. They are not normally recoverable.
A top agent can work through these figures and determine how they impact the property. This process of checking can help your ability to sell or lease the property.
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