Yield vs Price

Hi all,

I'm currently looking around to buy some commercial property for investment preferably with a lease in place.

Not sure whether to buy a couple of under $400K or something around $800k. Then should I go for offices or industrial, I've looked at Brisbane, Sydney and Melbourne areas, the yield can vary from 6% to 12%.

Seems to be lots to choose from in Brisbane and Sydney, not so much in Melbourne, Brisbane would be my preferred target as I'm relatively close to there (90 Km south of NSW border) and the market may have bottomed out now.

As stated in other posts here, there's lots of vacant CP around Brisbane which means any new lease will most likely fetch a lower price than the current lease which makes me feel uncomfortable of high yield CP's for this reason. Am I right or what ?

My question is how can I find out what the going rental price is for a given area. The agents seem to give me different figures and they're always based on what they're selling.

Is there a CP Data site like RP Data anywhere ?
 
Look at the flip-side. Look to the properties for lease (or hunt down a couple of leasing agents). Consider a 5 year lease (look at the asking rents, drop these a shade, and then assume that you may have to offer a 10-15% incentive (eg rent free period, fitout incentive etc) in order to lease the property out. Add to that a factor in a vacancy period of 3-6 months, letting fees of 10-15% and you probably won't see much of the folding stuff in the first 12.

Also, remember that cap rates do vary widely - retail has the lowest commercial yield, then office space followed by industrial (the rents also follow this same pattern). Eg Prime retail may lease for over $2000/m2 to a specialty store in a small shopping centre site where as you can get away with <$70/m2 for large industrial/bulky goods space.

The Thursday Aust Financial Review or Saturday's Commercial Property Sections usually have a round up of recent commercial sales/leases to give you a bit of a feel (check out your local library).
 
retail has the lowest commercial yield, then office space followed by industrial (the rents also follow this same pattern). Eg Prime retail may lease for over $2000/m2 to a specialty store in a small shopping centre site where as you can get away with <$70/m2 for large industrial/bulky goods space.

I'm not sure if I follow you here, I have to factor in the ease of selling in the future. So does it follow that a commercial shed would be easier to offload than a retail property ? Or a commercial shed would appreciate in bricks and mortar value better than a store front ?
 
Ease of disposal is more closely affected by the state of the economy, employment factors, availability of finance, political flavour, vacancy rates etc.

Capital appreciation is more a factor of functionality, suitability to purpose and demand hence rental growth based upon what has been negotiated in the lease.
 
Ease of disposal is more closely affected by the state of the economy, employment factors, availability of finance, political flavour, vacancy rates etc.

Capital appreciation is more a factor of functionality, suitability to purpose and demand hence rental growth based upon what has been negotiated in the lease.

That makes sense,
 
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