Commercial Property Mangment - Perth

[thedon]

Hi All. Well my next step into property investing and I have secured an older office in Hay st near Cinema city - 277sqm, partly vacant and I will owner occupy some of it. Just wondering if anyone can recommend an agent to manage 2 small strata's in it for us, made a few calls to today and the fees are much higher than residential which is annoying.

I'm hoping in the medium term (5 - 10 years) that CBD office space will go up which will make this investment worthwhile! Better than paying rent as well.

Has anyone tried self managing CBD commercial property?

Thanks

Don

 

[Dazz]

Hi Don,

Yeah, we are self-managing some CBD commercial stuff. When we rang around for quotes, the going rate was 16K p.a. for management. Based on 2 enquiring phone calls, the PM thought we were bunnies, so they quoted the work at 24K p.a. to us.

To their horror and discontent, we refused their kindly offer, and so the wife does half and I do half.....saving ourselves $ 461 p.w.

Depends on your skills set I suppose....but then with you being there as part of your business, I'd imagine it would be fairly easy indeed - depends on your experience.

I remember you being a tenant beforehand, so you have an example of a Lease and know what is involved - but this time you are on the nice end of things, so things should be pretty cruisy.

Can I ask as a data point what you paid per sqm.....around 5K ??

Good luck Don.

 

[thedon]

Hi Dazzling

Just under.. I know it is a high price but from reading all these forums in 5 years it won't seem so bad, that new cinema city commercial space I read in the west Australian prices were from $10,000psqm so less than 1/2 is fine by me.

I do have all those old lease agreements on hand and my current landlord just sent them to lawyer, we paid the costs! What about advertising though for tenants? realcommercial.com.au ? I don't think they allow private advertisers?

Thanks

Dan

 

[Ausprop]

exciting stuff Don. make sure you have some decent escalation clauses in your lease. I have been working on $530sqm in West Perth but by all accounts this could skyrocket towards $700 and beyond. throws the cap value all over the place... in fact it's hard to believe the numbers but they are there in black and white.

 

[grossreal]

hi don
what was the rate per sqm purchase and is it cbd I take it that it is.
I would be interested as you have bought 227sq
what is the plate size is this a full floor or a part floor.

is perth up to 10k psqm sydney cbd is 6.5k to 7.5k.
what did you work out the returns are for the floor whats the rental psq rate for the area.
I self manage as its not that difficult and you will find that you will also I think
as you end up getting on with your tennant if you are on the same floor.
make sure that you include a ratchet in your lease to the incomming tennants as this gives you annual increases in value of the property and your market will move if its is not already.
I posted sydney plate rates in the commercial section if you have been looking for a while in the perth cbd
it would be good to get the perth plate rates.
a plate is one whole floor
and as they move daily they give you a very good idea of return and cost of space.
I am paying 6.8k psq in cbd sydney and thats cheap for where I am buying.
hope you do well

 

[thedon]

Hi Grossreal

Rate was $4.5k psqm, rents seem to be $350, maybe 400 psqm for this type of building. Though based on what Ausprop just said I'd be extremely happy if they went to $500psqm!!! Not sure what the plate size is but I would think about 600sqm for that floor.

For new developments in Perth I've had agents quoting me $7000-$8000psqm and that is off the plan in Northbridge, which is on the fringes of the CBD.

I didn't really work out the returns that closely, I'll be losing about $20k-$30k gross per annum based on my figures at todays rates renting it at $350psqm, but have an asset that doesn't need very high capital growth to give a good return on the investment. Also locks in my "rent" for the next five years as I've fixed my interest rate without the worry of my previous landlord increasing the rent each year. If they had upped the rent to $700psqm then potentially that was adding $30,000-$40,000 per year to my expenses!

Don

 

[Ausprop]

Yeh $350+ would be about right for a smaller older office, but I thought the city was dearer than WP? maybe not. As I said tho I think those rents will track up as the newer stock comes on much higher. I was excited to hear this one is fully let:

http://www.realcommercial.com.au/cg...&header=&c=22839468&s=wa&snf=as&tm=1196732089

you wouldn't be able to get those rates anymore, the next new one they are doing lease by tender.

 

[grossreal]

hi don
sorry to say I think you need to go back to the back to the white board.
I have spoken today with a valuer. here for a couple of mine and asked him about wa and perth in particular and he is quoting alot higher rental so you need to work out the true rental before offering the vacant space.
he has told me that your market is the hottest followed by brisbane and then sydney so you have bought in the right market and at the right price.
I did tell him what you had posted and he was of the opinion that it was low currently.
and he was lower then my val and I am still running with it as it still is a doing project.
alot of tennants are buying because they see that the rents are going to go thru the roof so I think you have done well.
as long as you set the vacant space correctly.
not sure if they are over there but officenet.com is a cheap and relatively good way to get tennants.
I ususally buy with tennant I am going outside that with the next one as I have a tennant before I buy and have found the plate I required.
your market if as hot as has been told me is going to go for a very big jump as any slack is taken up.
what you need to do is to get a valuation done from collier,cbre,landmark white (cost about 2k) and then lock in the extra equity.
you will be very supprised what it worth.

 

[Ausprop]

I read today that BHP are paying $700sqm for their new tower in Perth - 60,000sqm @ $700/sqm... a nice asset for multiplex with a long term $42m per annum rental stream and the bluest of blue chip tenants, all built at cost!

capitalise that one at 5% and you are coming up with nearly a billion dollar asset

 

[thedon]

Amazing figures from BHP, that tower would be several years off completion though I imagine? All the construction I see in CBD seems to be apartments but very little commercial going in? I'm guessing the returns at the moment are better for residential in CBD than commercial. Leave a lot of opportunity for new commercial if you had the $$$$ Why wouldn't Fini or one of those companies do one I wonder.

Grossreal I tried that website but it seem incorrect you mention below? officenet.com

 

[Nicko]

I can recommend a CBD commercial agent to manage and/or lease your property, if you would like.

Leasing: Clive Noman 9288 0235 (Office Leasing Specialist)
Management : Michael McCormick 9288 0251 (Director - Property Management)