When it comes to listing and selling a commercial or retail investment property, a number of things should be investigated that could have an impact on the promotional campaign and outcome. It may be the right or wrong time to sell and on that basis all things should be looked at in balance and any problems fixed.
Here are some of the main points to review in any upcoming investment property listing. You can add your locational factors to the list and any special issues presented by the client:
- The tenant mix within the property should be analysed for strengths and weaknesses. Are the tenants adding or taking away from the sale process? A good tenant mix will help a property sell. That being said, you can spend some time prior to the commencement of the property marketing in fixing up the weaknesses of the mix. Investment buyers will review the tenants thoroughly and on that basis make sure you have all issues ready for their scrutiny.
- Lease documentation will vary across the property and between tenants. On that basis it pays to look deeply into every lease together with the conditions that may have an impact on the landlord. Income issues and critical dates will all be relevant. Also look at the duration of leases and the ways in which the income or rental is escalated.
- Rental structures will be impacting prices for the property. Understand the rental amounts, outgoings recoveries, net rentals, and upcoming rent reviews. Exactly what will these things do to the landlord’s property values?
- Market rentals should exist in the property (if the rents are below market then now may not be a good time to sell). The market rents can then be compared to market expectations and the potential price that you want to achieve. Yield calculations will have some relevance to the capitalization rates. Compare the rates achieved with similar properties in the same market.
- Market prices will be known and established. What relationship will the listed property have to the market prices? Will it be more or less attractive? What are the selling points that you should merge into your marketing efforts?
- Property outgoings and expenses should be assessed fully. Are they accurate? Can you rely on them as part of any property negotiation? The due diligence process in a property will find any weaknesses so address them before you go to the promotion phase of the listed property.
- Vacancy factors and market conditions should be assessed, as well as the supply and demand for properties in the category. How will those things impact your marketing campaign?
- Competing properties should be reviewed as to price and methods of marketing. How long have those properties been on the market? Understand the reasons for a competing property not selling and don’t repeat the errors.
- Current levels of enquiry will shift and change throughout the year. Pick the right time to take the property to the market for sale.
- Property zoning and or redevelopment opportunities will vary so look at what is happening in the broader property precinct.
So there are quite a few things to look at here when it comes to taking a commercial or retail property to sale as an investment. Get all the facts and assess them before your marketing campaign starts.