All Topics / Commercial Property / Warehouse in Residential Zone

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    Hi Guys,
    I'm looking at an manufacturer's building that is for sale in a area where there is a lot of warehousing/industry.

    The curious thing is that the building is zoned Residential- it's in a small street with medium density housing alongside.  I've called the council and it can continue to be used as it stands. 

    I'm considering whether this building could be used as a warehouse.

    What effect would this zoning have on the property's;
     1. ability to be used as a warehouse?  Obviously, issues like noise, truck access, etc exist.  Would the zoning absolutely rule out this property as a viable warehouse investment opportunity?
     2. rental return?  How much less/more would a tenant be willing to pay for a warehouse in a residential zone?

    Great website- I look forward to your valuable inputs.
    Cheers

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    Of most concern is the ‘existing use rights’ – when did the previous tenant vacate? This will expire after about 3 years.

    Rent should be on par for similar premises but unless there is a low vacancy rate/high demand for warehouses then you should only consider the current use for holding income & the highest & best use for the long term.

    Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    Thanks Scott, the current tenant vacated about 2 months ago.  I'll keep the 3 year expiry in mind, and the point about considering the long term best use of this property.  Redevelopment / Sub division would probably be inevitable down the track- that's something I need to understand more. 

    Do you think that I may be able to get a higher LVR from banks because of the residential zoning?

    This property attracts me also because there's an opportunity to live upstairs. 

    Living there might introduce more complication, but in all, I thought it might be a good entry-level commercial real estate investment.  Thoughts?

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    OK a couple of points to note: if you start using the property for another purpose eg only residential, then you will lose the existing use rights – which one is going to give you better rent?

    If you are going to occupy part of the building consider separating the entry to your domicile from the rest of the premises – as a tenant, how would you feel/what would your insurer say etc if you gave unfettered access to your property to another person who was not your employee etc?

    Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    To clarify, the 'Existing Use Rights' expire after

    The upstairs section is the only part that could be used to live in.  Downstairs is 900sqm of open space.  Good point RE separating the domicile entry point.  That's do-able.

    Can you suggest ways to best assess the demand for warehousing space?  Obvioulsy, speak to agents, look at current for-lease advertisements, any other ways?

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    If the premises are not used for commercial purposes but for another use, then the rights will lapse. If you find a tenant who wants storage etc (if this is the desired use) then the use rights will continue.

    Having a separate entry will save you alot of headaches (and then the two can be leased separately).

    Look at the http://www.commercialrealestate.com.au or http://www.realcommercial.com.au websites – they will give you an idea of what is vacant in the area. Likewise, speak to some of the local agents (as if you were looking for space).

    Which city is the property located?

    Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    The property is in Adelaide.

    You did well to answer my last reply- I accidentally sent it off incomplete…sorry

    I was going to say;
    To clarify, the 'Existing Use Rights' are at risk of expiring if;
    1. the property has been left unused for 3 years.
    2. you change the way the property is being used.  eg. Change its use from manufacturing site, to a warehouse, or more significantly, mixed use (if living upstairs and renting downstairs).

    You've answered these points above (thanks), although the way I'm reading your notes, it seems the mixed-use ideal wont necessarily void the 'existing use Rights'.  Something for me to look into.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    pm me if you want to know more.

    Profile photo of CHRISSYINBRISSIECHRISSYINBRISSIE
    Participant
    @chrissyinbrissie
    Join Date: 2011
    Post Count: 5

    Ipswich Qld has an absolutely fantastic area for what you are asking for.At the moment there are some massive corporations International and local building in Ipswich.

    Apparently Cavalier Homes was telling me some big names are developing everything from shopping centres through to INternational motels. A huge International Aliminium company built a massive plant on the Warrego hwy.

    Go to Tivoli, Ipswich Qld there is a new warehouse/industrial area that was built just recently near Booval. Its accessed from a very impressive bidge from the main shopping area of Booval.

Viewing 9 posts - 1 through 9 (of 9 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.