Commercial property for sale at the Victoria Park Centre, Perth WA listed by Ross Scarfone, Perth’s commercial real estate experts.

How to Evaluate Commercial Properties for Sale

Knowing how to evaluate commercial properties for sale is an essential skill in property purchasing. While understanding each element that goes into evaluating commercial properties can feel overwhelming, it doesn’t have to be and is integral in helping you make the right decision for a lasting investment.

In this guide, we provide you with the tools to conduct an effective assessment of commercial properties for sale in Perth. Taking you carefully through each step of the process including what factors are the most important to consider and how to approach the evaluation, covering everything from location and accessibility through to condition and maintenance. Our guide will help you evaluate Perth’s commercial properties for sale and determine if they are right for you.

If you’re just starting your journey with purchasing commercial property, it is crucial to ensure you have an accurate understanding of where to find commercial properties for sale. Knowing where to find commercial properties is critical for ensuring that you have the best possible choices available to assess and contrast. Not sure where to look? Have a read of our previous article on where to find commercial properties for sale and travel back here once you’re ready for the next step.

1. Location and Accessibility

When assessing commercial properties for sale, one of the most critical factors to consider is the property’s location and accessibility. This is one of the first thoughts that come to mind for many people when beginning to search for commercial properties to buy. Instinctively people will often have a location in mind initially, sometimes because they are familiar with the area, other times because they have seen similar businesses succeed in those Perth suburbs.

However, when evaluating commercial properties for sale based on their location, it is important to consider the full picture of what each Perth suburb has to offer. Victoria Park, Belmont, Midland — each suburb offers distinct advantages that need to be considered when performing a commercial property evaluation. Some areas offer advantages to office or retail spaces, whereas others are better for industrial or warehouse use. To make the best decision for your commercial property purchase, it is worthwhile to keep an open mind on location and consider the potential benefits of each, such as:

Accessibility – For showrooms or retail spaces this is how easy the spot is for customers to find such as proximity to public transport. For industrial investments, the focus is on heavy vehicle access and the proximity to Perth’s airport and major highways.

Local infrastructure – While investing in outer industrial, or growth areas, is cost-effective it is important to ensure that you’re investment has enough local infrastructure around to support it such as cafes, takeaways, and heavy vehicle maintenance services if applicable.

Popularity – A suburb’s popularity refers to more than just how many people visit the suburb but also how well-known it is within Perth. Both factors can influence the value of the suburb’s commercial property.

Population size – The population size of the Perth suburb you choose is an important step in evaluating commercial properties in Perth.

Surrounding businesses – Consider the surrounding businesses and how they compete or complement your industry and purchase goals.

Suburb growth and market projections – When you evaluate commercial properties, nothing can be considered in isolation. Thinking in the long term will help ensure that the location you pick doesn’t just work right now but works for the future as well. Your perfect location today could be set to undergo massive changes in the coming years which change the return of your purchase.

Understanding the property market to this extent can be tiresome and difficult but it is an essential early step in analysing commercial real estate listings. Working with a local real estate expert in your areas of interest can help you build an in-depth picture of the value of varying Perth suburbs for your purchasing purpose.

Commercial property for sale in Willetton, Perth WA listed by Ross Scarfone, Perth’s commercial and real estate experts.

2. Tenant Mix

The tenant mix isn’t a term known by everyone but is an important consideration when evaluating commercial properties for sale. To put it simply, the tenant mix is the group of tenants that occupy a space. The most common example of a good tenant mix is a shopping mall, in which each tenant contributes to the mall’s overall success and the success of the other vendors.

Whether you’re buying commercial property for office, retail or industrial purposes, it’s integral to consider what the tenant mix currently looks like and what the ideal tenant mix for your business is. The tenant mix is a complex thing, factors such as the location, competition, rental rates, and tenant preferences of a Perth suburb all weigh into how the tenant mix will evolve and affect the longevity of your property. To consider all these elements holistically requires in-depth expertise on not just the suburb of the commercial property as a whole but the suburb’s smallest details, right down to the nearest street corner.

3. Property Condition and Maintenance

During your assessment of commercial properties for sale ensure you take the time to thoroughly investigate these properties in person. During your in-person commercial property evaluation, take note of the age and state of the building, including its structural integrity, roof, and mechanical systems. Ask questions and enquire about recent repairs, upgrades, and ongoing maintenance costs as well as operating costs. Consider the property’s energy efficiency, as this can be a key factor impacting ongoing costs.

A well-maintained property can save you significant expenses down the line, while a neglected one may require substantial investments to bring it up to standard. Failing to thoroughly investigate during your commercial property evaluation can leave you with unwelcome costs down the track.

By carefully examining the condition and maintenance aspects when you evaluate commercial properties for sale, you can make a more informed decision, avoiding unexpected expenses and ensuring a smoother ownership experience.

Commercial property for sale in Midland, Perth WA listed by Ross Scarfone, Perth’s commercial and real estate experts.

4. Zoning Regulations and Permitted Uses

A thorough understanding of the zoning regulations across Perth suburbs is an important step as you evaluate commercial properties for sale. These regulations change across suburbs and postcodes, so make sure to pay careful attention to the area where your commercial property is located.

When you evaluate commercial properties in Perth, it’s crucial to understand the local zoning regulations and permitted uses regardless of the reason behind your property purchase.

Perth’s commercial zoning laws are key laws that impact the use, potential and size of your commercial property. Some rules covered by commercial zooming laws include:

Depending on the area in which you are assessing commercial properties, the zoning laws may be harsher and more stringent. While you may believe you have found your dream Perth commercial property, an understanding of that area’s zoning laws may reveal restrictions on your property that stop your purchase in its tracks.

Analysing commercial real estate listings should involve verifying the zoning classification and any heritage or conservation overlays that may restrict development potential in addition to the laws we have outlined above. As with each step in analysing commercial real estate listings, you will want to not only consider the current zoning laws but also forecast how they will change and evolve in the future. Consider the possibility of the zoning laws developing to become either less or more stringent in your areas of interest. For a thorough forecast in this area, it is best to consult with a local expert who has a thorough, long-standing idea of the area’s zoning laws and local government.

Commercial property for sale in Maddington, Perth WA listed by Ross Scarfone, Perth’s commercial and real estate experts.

5. Financial Performance and Potential Returns

A thorough assessment of commercial properties for sale in Perth should include a detailed financial analysis of the property. Spanning more than the current and historical income and expenses, it is also important to consider:

These elements can help you in assessing the future financial performance and returns of commercial property but should not be considered in isolation. When you evaluate commercial properties, it is important to consider other elements in tandem such as the property’s age, condition, location, and all other factors we have discussed.

A few key financial indicators alone will not be enough to accurately assess the profitability of a commercial property. Instead, take a holistic approach, considering each element and how they affect one another on a larger scale. By prioritising financial due diligence, you can make a well-informed decision when purchasing in Perth’s commercial property market.

Analysing the Market to Accurately Evaluate Commercial Properties for Sale

No matter what stage you’re at, market analysis matters. Whether you’re just starting your buying journey trying to figure out where to find commercial properties for sale, or you’ve got a property in mind. At every step of the journey, it is necessary to understand the market forces at work and think forward into the long term, considering market forecasts and trends in your area of interest.

Considering every factor, its place in the market and its ability to transform over time is a lot to keep up with. Thankfully, you don’t have to do it alone. Reach out to our team of commercial and industrial real estate experts for industry-leading insight and advice.

 

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About the author

Paul is Ross’s son and joined the company in 1998 after completing ten years working for a major bank in both the Metropolitan and country areas and then two years working in residential real estate.

Paul, the current Director and Licensee of the Business has completed his Advanced certificate in Business (Real Estate), Bachelor of Commerce (Property) and holds a Triennial Certificate.