Splitting up an industrial property.

Just wondering what sort of requirements (council or other) there would likely be for leasing out parts of an industrial property to multiple tenants?

I have been keeping an eye on an industrial property that sold in September last year and has been sitting vacant and for lease since.
I was interested at time, but by the time I had an idea that could make it profitable it had already sold. Now that it has been vacant for so long I have been considering contacting the owner and making an offer to take it off their hands.

The unit is located in an industrial estate of around 15 lots at about 1000-1500m2 each, completely surrounded by medium to low density residential. The property in question is approx 1100m2 with about 900 under roof.
With the area its in there just aren't any tenant in need of, or able to pay for a unit that size. I have the idea of splitting the unit up by adding 2 internal walls and 2 new roller doors, renting the 3 resulting units out for about 250-270 per week. I figure thats low enough for tradies or someone running a small business to use for storage or as a small workshop.
 
Apart from providing amenities, phone line, parking, separate power/metering etc to each unit. You may also be required to provide fire separation.

Can't comment on the appropriateness of the rental level but it would appear low though it would depend upon the quality of the building. $20-25/m2 barely covers handstand areas.
 
The property in question is approx 1100m2 with about 900 under roof.

I have the idea of splitting the unit up, renting the 3 resulting units out for about 250-270 per week. I figure thats low enough


So your plan....is conditional upon ;

1. Having the Owner agree to your offer to buy.

2. Having a Bank approve the finance.

3. Having the surrounding residential neighbours not object.

4. Having the Council approve your sub-division.

5. Having 3 unknown Tenants sign a Lease.


Wow, you've only got 7+ unrelated parties who need to agree before you can proceed.....good luck with that. Just one "NO" and your plan is kaput.


Even if you get that far, you're planning on charging them $ 250 per week for a 300sqm industrial shed ??


That's a miniscule $ 250 * 52 = $ 13K p.a. = $ 43 psmpa which as Scott pointed out above is only just above market rates for hardstand.


My suggestion Xjas is clear the study board and start again. You haven't really even started your homework.
 
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Dazz

this isn't about making money or turning a profit, it's about being noice.

Didn't you didn't get into commercial property to make friends and influence people? ;)
 
Dazz,

May as well add;

6. Find a JV partner.

As I'm a bit short on equity at the moment. Don't really see any harm in kicking the idea around a bit though.

Scott,

The industrial estate is in a area where it used to service an underground coal mine, the mine is now gone and with little other industy in the area the demand for industrial property is low, hence why I'd expect the yield to be low but property prices also reflect this.
Before you ask, why anyone want to buy a low yielding, no hope of foreseeable growth industrial property? In a few years time I plan to leave my employer and work for myself, some industrial space at my disposal close to home would make the transition much easier and more practical.

Most of the things you mentioned are doable except for the parking, there is I think 4 spaces in total now but no room for any more.
I wouldn't be subdiving the block into separte lots, only renting it as separte lots, not sure what difference that would make.
 
How the hell are you going to find a JV partner on a dead end prospect?

I would put this to bed before you get yourself into strife.

Ask yourself before any investment:

How does this get me to my end goal?
How does this get me more skin in the game faster?
What is my exit strategy if things go pear shape?

If you can't answer the above without any certainty, then the investment isn't for you.


pinkboy
 
And on top of above your first years rent would be eaten in subdiv and construction/works costs. Big walls and roller shutters dont come cheap
 
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