Commercial property investment (in particular, retail and office property investments) is a great way to help diversify your property investment portfolio. Although they are two very different sectors, many buyers are now experiencing excellent combined returns as a result of entering into these markets. So what are the other benefits? Firstly, the typical lease for a commercial investment property such as an office can run for as long as 10 years, with retail properties stretching to 20 years or more.
This can be hugely advantageous when compared to rental leases in the residential sector, which usually last just six to 12 months. Investing in commercial property means that you don’t have to find new tenants each year or worry about times of ‘void’ – when your property sits empty and you are not receiving an income to cover your mortgage payments.
Secondly, due to urban regeneration, mixed purpose developments, especially in areas of the UK, are now currently seeing steady growth, with a number of integrated office, retail, leisure, residential and hotel developments emerging up and down the country.
To make way for this concept, an increasing number of towns and cities have begun to adopt specially tailored mixed purpose development districts or standards in their zoning ordinance – something of a challenge when compared to more traditional stand-alone projects in the residential sector. Many of these special standards provide incentives such as reduced parking requirements, landscaping provisions and design requirements.
Now is the ideal time to secure a property investment. Commercial property relies heavily on its location, however. By purchasing in an area that has recently been dubbed a ‘hotspot’ you are more likely to generate a sufficient yield than by investing in an area less sought after by tenants and others looking to secure their own commercial property investment. Yields can depend on factors such as nearby residential property too. For example, companies are more likely to set up their offices in town and cities which offer attractive accommodation to potential employees.
Breathing new life into the community is just one great reason to get involved with commercial property investments. UK inner city areas are a great example of this, with many parts of its northern towns and cities, such as Liverpool, Leeds and Manchester having been completely revamped with sleek, elevated and visually appealing mixed purpose developments – proof that commercial property investment funds can have the power to transform a once drab area to a thriving hub.
As with any type of investment, it is important that you seek good commercial property investment advice before you sign anything. It is essential that you also carry out research into up-and-coming areas and the type of commercial properties available (i.e. retail, office etc).
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.