Questions & Answers

Commercial Real Estate Questions and Answers

 

1/ What is the major benefit of owning a Commercial Property?

In most cases, Commercial properties receive higher annual returns then Residential properties. Commercial properties depending on location, type of tenant, ownership and length of lease, can have annual returns ranging from 5% to 12%.

 

2/ How does Commercial Leasing differ from Residential Leasing?

A Residential lease is a standard form and not a lot can vary especially in the terms of the lease – it is generally a very simple negotiation, how much do you want to pay and for how long? However a Commercial lease is much more complex – You negotiate length of lease, bond amount, rent free period, fit out contributions, rental increase, option term etc…

Despite being more intricate and involved, if you appoint a skilled and experienced agent the experience is not as complex as it sounds.

 

3/ What are the tax benefits of owning a Commercial property?

Business owner benefits – Business owners can take advantage of buying the premises they need to occupy. Great tax advantages can be found doing this.

For the investor Fit-out costs can be depreciated.

 

4/ Do all Commercial Tenants Pay Outgoings?

No, this is a negotiation between the Landlord and the Tenant. Leases can either be negotiated with a Net Rental or a Gross Rental Return.

  • Net Rental: The tenant pays the rent and then the agreed outgoings are paid in addition
  • Gross Lease: The landlord pays the outgoings

 

5/ Can Commercial Property be in a Redevelopment Area?

In most suburbs across Sydney, the main street has been or is marked for redevelopment usage.  As Sydney grows the council needs to provide more housing and infrastructure, as the main street already has some development and transport in place we see councils granting the owners a higher FSR ratio of the land owners, creating a higher use for the property

 

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