Commercial Property Yields

Hi Everybody,

Is there anybody out there with experience in Commercial property ?

If so, some questions ...

Q1 :
What minimum yield (ballpark) would one expect from a commercial property with good (Doctors * 4 GP's) long term (5 years +) in a surburban location ?

Q2 :
What kind of structure (trust , company) is most suited to renting a commercial property ?

Q3 :
What expenses may a commercial property have that a residential IP wouldn't ?.

Q4 :
Are there any special insurances (excluding building insurance) the landlord must have or is the responsibility of the tennant ?

Q5 :
Is land tax levied in the same way as residential IP's ?

Someone I know has been involved in, and been quite successful with commercial property for around 15 years now. A little while ago, I asked him for his "golden rules" for investing in commercial property. He replied that it is really quite simple:

1. Must be corner location
2. Must be tenanted
3. Must have large land component
4. His return must be 8% net


Hmmmmm, for these expecting a bloodbath in over supplied rental units; well that rates behind the expected travesty in commercial leasing. (In Sydney )

The commercial rental market is slowing at an alarming rate and the talk amongst the listed property funds is mostly about devastation.

Currently we are in the process of acquiring commercial premises in the North Sydney / Milsons Point area and we are being offered up to 12 months rent free and they will pay for the fit out!
And we have various interested agents competing to get the business.

I'm hardly ever a prophet of doom, but BE CAREFUL.


Looming opportunity then?

Wow, so Sydney commercial property is in a slump right now?

Does that mean good deals will start to pop up with returns of 10, 12, 15+ %pa?

Or are the cheap properties likely to be vacant and have no guaranteed rent at all?

Buying opportunity for a contrarian buyer in a year or two?

What about other major cities (esp Perth)?

Lotsa questions.