I think it was worth posting. A few years back there was a local CBA branch premises that was cheap enough for me to look into it. If you give just one person a hint that the lease might not be renewed it was worthwhile.
Heads up...
- Thread starter John_
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I think it was worth posting. A few years back there was a local CBA branch premises that was cheap enough for me to look into it. If you give just one person a hint that the lease might not be renewed it was worthwhile.
John
Not sure what the point , but some of the Coles dc's rent are 400k + per month, plus outgoings. Plus they have to negioate payout terms of the leases etc.Companies like Coles need to upgrade facilities & supply chain models.
In Melb the big corps are building dc's out west, if you land banked 10+ years ago in trugannia/ altona / laverton industrial you would be very happy investor. More larger corps are all moving that way close to the docks. Companies cant wait for the govt to make up there mind about docks in Hastings, Geelong, etc. it's perhaps years away yet.
Not sure what the point , but some of the Coles dc's rent are 400k + per month, plus outgoings. Plus they have to negioate payout terms of the leases etc.Companies like Coles need to upgrade facilities & supply chain models.
In Melb the big corps are building dc's out west, if you land banked 10+ years ago in trugannia/ altona / laverton industrial you would be very happy investor. More larger corps are all moving that way close to the docks. Companies cant wait for the govt to make up there mind about docks in Hastings, Geelong, etc. it's perhaps years away yet.
I can't remember which one but a new DC was built just outside of Albury/Wodonga in the last couple of years. Only 3-4 hours from most of Victoria , southern NSW & ACT.
It is appreciated. The number of responses and look-ins would show that.
Though the title is a bit sensationalist LOL.
Yes, worth thinking about, it's another step on the way to them completely cutting out all the middle men in their supply chains.
On another note I know Lion Nathan is scrambling to cover their loss of Coles milk contracts.
"Current Coles supplier Lion Nathan National Foods - which is owned by Japanese giant Kirin - loses the massive Coles contract from the middle of next year and possibly adds to the $2.2 billion of writedowns it has suffered since unwisely buying National Foods from San Miguel in 2007."
Read more: http://www.news.com.au/business/com...le/story-fnda1bsz-1226617763347#ixzz2WSHkcmO6
I suppose his warning is pertinent to owners getting all excited and reducing their expected yields to buy properties with tenants such as Coles or CBA. They may expect (or be told) the tenant will be happy to take up their option etc etc and hence they get an unexpected vacancy, loss of rent, have to give incentive to new tenant etc etc.
However, as was mentioned, anyone buying a Coles DC would be astute enough to do their DD to the extent of finding out this information.
The warning re: banks is pertinent though. Anyone buying commercial property tenanted by banks paying way above market rent woudl be best to stay away.
As for the banks, many of them are following suit and cutting down on rent. CBA Richmond (NSW) just downsized. St George in Penrith (High St) just closed down. Funnily enough the owner tried to sell for a ridiculous amount with a 'secure lease to CBA' not long before the shop became a ghost town.
EDIT: I didn't read the whole thread. Aaron summed it up better than me.
+1
Yield is sometimes not worth the paper its printed on.
I recall a site in Perth, on Albany Highway, just 9km from the CBD and right next to a shopping centre. The building was auctioned and the buyer bought it from the CBA around 1996. The bank had a 5 year lease and a 5 year option.
At the end of the lease, the bank moved away - as was their right.
The building remained vacant for a few years before being leased out at a much lower rent.
Today, 17 years later, the building is worth less than what the buyer paid for it.
Paying too much for anything is fraught with danger.
I recall a site in Perth, on Albany Highway, just 9km from the CBD and right next to a shopping centre. The building was auctioned and the buyer bought it from the CBA around 1996. The bank had a 5 year lease and a 5 year option.
At the end of the lease, the bank moved away - as was their right.
The building remained vacant for a few years before being leased out at a much lower rent.
Today, 17 years later, the building is worth less than what the buyer paid for it.
Paying too much for anything is fraught with danger.
wow that's an eye opener... you would assume most mistakes would cover over in the course of 17 years! especially a good location liek that
Location, optionality, flexibility is very important for commercial.
In residential, at a certain price, someone will always rent it. In commercial, even if rent is 0, there could be no one who would want it if the location is useless. And I say that coming from a background of having rented over 100 commercial premises.
There are some people who make very good money buying fringe commercial properties, but certainly not my type of thing. I only stick within 500 meters of the centre of every CBD.
In residential, at a certain price, someone will always rent it. In commercial, even if rent is 0, there could be no one who would want it if the location is useless. And I say that coming from a background of having rented over 100 commercial premises.
There are some people who make very good money buying fringe commercial properties, but certainly not my type of thing. I only stick within 500 meters of the centre of every CBD.
You mentioned 500m from the CBD. What sort of dollars are you looking at and where is the best value in major-city Australia?
Appreciate your opinions.
This can have a huge impact on neighbouring businesses as well. I was a facilities manager for Medicare many moons ago. Locations of offices could make or break smaller plazas. It wasn't uncommon for us to negotiate free rentals because the landlord would know he could charge a premium rate for the neighbouring shops.
Interesting news. Re Coles, similar story said to be happening with Target (also Wesfarmers).
I'd be a bit nervous from a valuation standpoint if a long lease is approaching expiry (<2 years say) and the tenant is definitely vacating. A lot of time you'll find these long leases have had fixed increases on the way through and are collecting above market rents too...
But as has been said:
1. There aren't too many little ol' battler landlords with multiple footie field size distribution warehouses that will be affected; and
2. With enough notice to find a new tenant, you can negotiate a lease surrender, get the new guy in and be better off!
I'd be a bit nervous from a valuation standpoint if a long lease is approaching expiry (<2 years say) and the tenant is definitely vacating. A lot of time you'll find these long leases have had fixed increases on the way through and are collecting above market rents too...
But as has been said:
1. There aren't too many little ol' battler landlords with multiple footie field size distribution warehouses that will be affected; and
2. With enough notice to find a new tenant, you can negotiate a lease surrender, get the new guy in and be better off!
Depends on size really and location. Across the road could be a million dollars difference.
Delta, take Chatswood for instance, purchase on the wrong side of the Pacific Hwy and rents drop dramatically (so do yields). Same can be said for lots of other CBDs.
Ah absolutely, even the best "located" land in the CBD might actually be a poor "position" and you'll struggle to attract good rent. 20m is a very big distance.
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