Just bought first commercial- Adelaide

Discussion in 'Commercial Property' started by Erica, 27th Mar, 2015.

  1. Erica

    Erica Member

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    Negotiated on 3 different commercial properties in Adelaide over the past 12 mths- went in low and managed to get a 10% discount on all (from list price), not sure if this is standard realestate agent method (advertising 10% higher than expected sale price), or just a reflection of the subdued market.

    We are confident we are buying at the bottom of the property cycle (6pm on the property clock), although I'm sure it will take at least a few years for any upswing in commercial prop values in Adelaide. This is a long term buy and hold (20 yrs) as we are going to run the family business from the site.
     
    Last edited: 27th Mar, 2015
  2. Corey Batt

    Corey Batt Finance Broker

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    Which areas were you looking in and ended up with? Type of commercial - retail?
     
  3. Erica

    Erica Member

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    Type- office and associated warehouse

    Hubby is in business with his brother- transport company moving heavy goods-mainly bricks, pavers, tiles, retaining blocks, pool coping etc. and grapes during the harvest.

    Needed plenty of land to swing in trucks and semi trailers plus a large shed for doing maintenance/ an office/ plus storing product.

    The areas we decided to look at was primarily decided by the maximum distance the brothers were prepared to drive to work every day from Glenelg- a bit more like purchasing a PPOR really. And since we needed vacant possession, we didn't consider yield/leases or any of that stuff.

    We negotiated on properties in Wingfield, Marleston & Royal Park- bought Royal Park.

    We basically attempted to ascertain the average price per sq meter for vacant industrial zoned land in each suburb (combination of looking at prior sales nearby/ asking for bank valuation- freebees through contacts;) , then added on what we thought was about fair value for any improvements on site ie. sheds/ 3 phase power/ concrete carparking vs gravel etc.

    Wingfield about $200 per m sq land only
    Marleston $450 per m sq land only
    Royal Park $300 per m sq land only
     
  4. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Great results Erica. Good luck with it especially as it will be owner occupied.
     
  5. Erica

    Erica Member

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    dodgy agents

    Looks like I got a bit overexcited to share my good news with the crew at Somersoft.

    We had the price and conditions agreed upon, and the contract all signed off on Thursday, we was just waiting to have the official copy in hand (with vendors/agents/our signatures in place) and thus for the start of the cooling off period to begin, when we get a email at 6pm the next night from the agent; 'oops sorry, I forgot to have you sign this extra clause that should have been added to the contract of sale you signed yesterday, just sign this off and send it back to me ASAP'

    Ah, I see, no big deal, (sarcasm!) the owners would just like us to waive off any rights to legal recourse if any site contamination is found- (not a standard clause in contract of sale, but this site is owned by a large chemical company for past 15 yrs, guess they are a bit nervous about it)

    Mmmm, well, our options are as follows; add in our own clause 'sale is subject to soil testing to rule out any site contamination' at about $4k to us- but not a good idea as we are quite sure they would find some contamination (particularly as there is a sump/pump onsite) and trust me (gov employee) no one wants to get the EPA involved.

    So simplest thing is to wait and see, we have gone back with a simple; 'no, we won't sign that, contract can move forward as is or not at all'.

    So we will just wait and see if the owner is prepared to drop the extra clause or not....
     
  6. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Ask your solicitor if liability for contamination passes to the new owner or remains with the person causing the contamination.
     
  7. Erica

    Erica Member

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    Yeah will do, getting legal advice now, have emailed the clause on to a solicitor for a good look, but a quick chat revealed 'no' owner can not pass on liability for contamination that can be proven was caused during their ownership, but good on them for trying to anyway..:eek:
     
  8. cu@thetop

    cu@thetop Member

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    Yes but the cost of remediation will land on the lot owner. The inclusion of this clause at the last minute rings alarm bells for me.
    Proceed with caution.
     
  9. Erica

    Erica Member

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    Yeah, true that, $200 per tonne just for dumping contaminated soils (not including excavation and importing clean fill).

    Alarm bells are ringing loudly for us too, especially since the company owning the land for last 15yrs is into chemical importing/packaging and distribution:eek:

    We are proceeding with caution, we are not going to gamble away our superannuation and we will walk away from the deal if need be:)

    Oh well, never mind, this is a good learning experience