There is a great opportunity for owner occupiers in the Brisbane commercial property market at the moment. Owner occupiers will buy a building to house their business either in part or full, most commonly leasing the property to the business. We see it as an ideal time for owner occupiers and for a number of good reasons.
With the cost of debt for commercial property sub 3% in many cases, it makes financial sense for businesses to purchase rather than rent. With finance so cheap, the cost of buying could actually be signifcantly cheaper than renting. Take these numbers as an example:
An office building bought for $2.5m.
Finance 65% of purchase price = $1.65m
Interest p.a (assuming 2.5%) = $41k
Outgoings p.a (including land tax) = $31K
Total expenses p.a = $72k
Market rent (assuming $350/m2 gross) = $226k
SAVINGS = the buyer is over $150k better off p.a
Now, don’t get me wrong – the banks aren’t throwing money at people. Buyers will mostly likely require circa 30-35% in cash or equity and solid business financials to meet funding approvals, however the case is certainly clear. Further sweetening the situation is that fact that interest rates are forecast to remain low for quite some time.
In certain sectors in the brisbane commercial property market (but not all), such as office and retail – the impacts of the last several months have meant that many landlords have been left with significant vacancies. The leasing market is challenging and the longer these buildings sit vacant, the more pressure is placed on these owners particularly those may be highly leveraged – the more they may be forced to sell. We see this as providing more opportunities for owner occupiers who can take up such spaces without the need to find a tenant.
If you are considering Brisbane commercial property for your business, and find the process of looking for the right property difficult or you simply don’t have the time – we can help.