Consider the state of the economy

Before signing on the dotted line for a commercial property, it’s worth considering how the economy is performing.

Demand for high-end service providers can wax and wane, giving commercial property owners more exposure to financial ups and downs than residential. Nicole recommends speaking to financial experts to gain an understanding of current economic and market trends.

Make sure your practice is accessible and accommodating

A second-floor medical clinic without a satisfactory lift is a sure turn-off for potential patients with extra needs, such as the elderly, people with a disability, or parents with young children. ‘A practice needs to be easily accessible and accommodating to the needs of your patient base,’ Nicole says.

Superior and well thought-out property facilities can aid your practice in the day-to-day, but also could ultimately contribute to a higher potential resale value of the site in the future as well. Be sure to look out for:

• working lifts or entrance ramps for better accessibility
• secure and simple parking options
• property security
• access to IT infrastructure.

Understand your obligations with existing leases and tenants

Investors in commercial property should understand their legal obligations when acquiring a property and taking on an existing leasing arrangement. If, for example, a tenant’s current leasing arrangement or terms are inconsistent with market norms, this may impact profitability on the property.

On the contrary, if a high-paying tenants’ lease is about to expire, the new owner runs the risk of purchasing suites that could soon be vacant. ‘It’s important to look at the tenancy demand and vacancies within an area, including the profiles of the existing tenants,’ Nicole says.

Think about future growth plans

Nicole says prospective commercial property owners should understand the growth plans for their practice before agreeing to a purchase.  

‘Some practitioners may currently be operating out of a one or two room practice, but their goal might be to expand in the future,’ she says. ‘Does the property you’re looking at accommodate those growth plans?’

Failing to account for the anticipated growth could result in significant costs if a bigger site is required within a few years, particularly if your practice needs purpose-built fixtures and fittings.

Other elements to think about include:

Zoning and heritage guidelines
Converting an existing house or property into a purpose-built medical practice could be subject to strict council planning laws. Check that the property is correctly zoned for the intended use and relevant permits held if required.

Potential extra costs
The purchase of a commercial premises can attract GST, especially when buying off the plan. This can make a significant difference to cashflow or financial viability of the site. Also factor in costs such as stamp duty, initial set-up costs and signage.

Contract of sale
Doing your due diligence on a commercial property is a must, Nicole says. That means paying attention to financial and legal considerations, and having a building and pest inspection that discloses any underlying structural concerns with the property and its infrastructure. This often-exhaustive checklist underlines the importance of seeking advice from trusted banking, finance, and legal advisers before finalising a commercial property deal. ‘We have the industry knowledge and can help clients ask the right questions,’ Nicole says. ‘This is what we do every day.’

Want to know more about a BOQ Specialist commercial property loan?
Visit boqspecialist.com.au/commercial or speak to your local finance specialist on 1300 160 160.