Was just after some advice on an IP I own.
This IP in particular has two shop fronts and 2 apartments above. It is 75% leased out and is cf+ (just). One of the shopfronts has been vacant for about a year or so. Would it be wise to offer this shop at a cut price rental? I guess it would be better than no money at all but would a move like this effect the overall price of the property? Are there any smarter ways of getting people in other than dropping the asking price (rent)? Maybe I can offer half price rent for a year or something….or is that a little extreme? There 2 – 3 other properties on the street that are also vacant and asking about the same price.
Cheers if anyone has any ideas.
Rather than discount the rent, offer a contribution towards fitout or the first two months rent free. On a commercial property the rent is what gives you your values, so a lengthy discounted rent will affect your valuation
Hello ogilvy
crj is 100% correct. I had a similar problem (not for as long thank goodness) with an industrial property and offered the first 2 months rent free.
The problem with lowering the rent it that it not only lowers the valuation of your property as crj mentioned but that it’s a long term effect as far as the rent is concerned. By this I mean that all yearly %age increases are based on the original rental for the term of the lease where as a rent free period only effects the first years income.
Also a lower rental may cause you more problems with the tenants in your other shop.
It’s better to offer even 3 months rent free or, as crj suggested , help with the refitting rather than lower the rent IMO.
Good luck [smiling]
ElkaHi ogilivy ,
what suburb is this property in ? What is the population?
I agree with elkham and crj, you could offer a long rent free period but a premium on rent , i would suggest a 3 x 3 lease. Be very careful with commercial leases , there has been precedent law cases of non dislosure of outgoings and the tenant claiming the full rental as a compensation. I suggest using an experienced lawyer.
cheers
tony
Wholesale Property Brokers
http://www.wpb.com.au
Australia*Hong Kong*Singapore*India*MalaysiaHi all and thanks for your replies.
The town is approx 60,000 people and is in the hunter region.
I like the idea of assisting with the fitout. I will try that one out.
Cheers
Hello ogilvy
Have you had any success with leasing your shop. If so can you please share which strategy you used that worked?
Cheers
ElkaHi Ogilvy,
Another thing you might like to consider is the use you put the shopfront to, shops in secondary locations (ie not is a major shopping strip) are often difficult to lease, but they are also often attractive to businesses such as medical practices or as offices. I strongly suggest you speak with a specialist commercial agent re what is in demand in the area, you may find that it is better to market the property for an altenate use.
Regards
Alistair
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