| In commercial real estate you need to keep your | | | | expansion. |
| focus on the trends of the market. You also need to | | | | Occupancy space supply and the success of |
| know exactly what exists in your market. Property | | | | Commercial Property is influenced by: |
| types, rent types, tenant types, sale prices, and | | | | - competition properties existing locally |
| yields all have relevance to the property investor and | | | | - land costs current and future |
| the strategy that they need to adopt. | | | | - assessments all of all other projects underway |
| In times of market and economic change, it is these | | | | - newly constructed properties |
| elements that offer opportunity to buy, sell, and | | | | - demolition of older properties |
| lease property in varying ways. The commercial | | | | - plans for new properties |
| property market works in cycles, and the choices | | | | - building costs in your area currently |
| you make today on a property matter are not likely | | | | - rental levels in your area and projections |
| to be the right choices in a few months time. | | | | - operating costs for the building |
| Property agents and investors that read the market | | | | - the pressures of available financing |
| well will make good income from the 'churn' of the | | | | The demand for Commercial Real Estate is driven |
| market. | | | | largely from: |
| There is no 'bad' property market; there is just | | | | - known and predicted pressures and changes on the |
| change and the need to adjust to it. When you | | | | population |
| adjust, you can do the deals and seize the | | | | - regional and local demographics of the customer |
| opportunity. Investors and real estate agents that | | | | and the business community |
| suffer in 'down' economies and property markets are | | | | - the spending patterns of the population |
| those that struggle with change. Alvin Toffler wrote | | | | - growth in major industry locally |
| a great book some years ago on just that point, | | | | - natural resources existing to support or require |
| called 'Future Shock'. When you understand the | | | | industry |
| principles of change and big events then you can | | | | - sales volumes of goods purchased (retail property) |
| seize the opportunity in the property market at any | | | | - rental activity (gross, net, face and effective rents) |
| time. The most successful people in the commercial | | | | - incentives offered for new tenants to occupy |
| property market watch for change and move into it | | | | - services and amenities offered in properties |
| with a plan of opportunity. | | | | - vacancies now and projected |
| So what do you need to do in this market? First and | | | | - turnover of sales (retail property) |
| foremost you need to understand the current | | | | - consumer buying patterns (retail property) |
| conditions which are applying to the market and the | | | | - overall prices for comparable properties |
| subject property. | | | | Further consideration also needs to be given to the |
| You are looking for indicators which show the: | | | | potential of expansion or replacement of any |
| - potential demand for property | | | | competition property within the precinct and also the |
| - absorption of occupied space | | | | relationship of such to your subject property. Any |
| - future constructed space | | | | competition property needs to be watched for its |
| - business sentiment in the area | | | | impact on your investment property. |
| The market study will include an assessment of both | | | | As you can now see, the potential of a Commercial |
| the broader region and the local precinct and their | | | | Property cannot be simply assessed from economic |
| potential to satisfy tenant and business growth and | | | | activities in the area. There are other pressures which |
| decline as it may apply. These two factors alone will | | | | will change and have a reasonable effect on the |
| largely dictate future rental levels which in turn will | | | | subject property and these include political changes, |
| affect the potential price of a property. | | | | legal changes, deterioration of the building fabric, |
| It's all Strategic | | | | social changes, and rental pressures geared to |
| Essentially properties that are becoming obsolete are | | | | business sentiment. The property investor becomes a |
| not good investments unless a refurbishment | | | | specialist in assessment of these broad investment |
| strategy can be applied and be seen to be a | | | | trends. |
| successful strategy given prevailing market conditions. | | | | Commercial real estate agents should monitor all of |
| Obviously this decision hinges largely on the asset | | | | the above factors to help their clients take up |
| itself and its ability to adjust to refurbishment and or | | | | property opportunity as the market allows. |