There are many aspects to consider when attempting to maximise the potential of your existing commercial property, or when seeking to purchase a commercial property. These each have a direct affect on the value of most commercial properties, but their weighting will differ from property to property on an individual site basis. Essentially, it all relates to creating demand for your property. Some key considerations that help maximise potential include:
Highest and Best Use of the Property
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Applying to rezone your property. Rezoning applications can allow for a more intensive use of your site or permit future redevelopment. This may not be something that you require directly, but may create the opportunity for someone else at a later stage who may pay you a premium for the opportunity.
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Planning permit within existing zoning. Opportunity creation for your site may not necessitate a rezoning requirement, it may be that the existing zoning of your property allows for further development to be undertaken subject to a Town Planning Development permit from the local council.
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Strata titling your site. For example, you may have a larger site than your requirements dictate, therefore there may be the opportunity to strata title your property and sell any excess portion to realise equity within the property.
Refurbishment vs. Overcapitalisation
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The refurbishment of a property can provide for a significant increase in capital value, but it is important to appreciate that what may suit your specific needs may not be that appealing to the market.
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Generally, the more specialised the design of a property, the less demand that is likely to be generated in the market for the accommodation offered.
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It may be that a specialised fitout meets the requirements of a niche in the market, but it must be remembered that the market demand will be thin or limited.
Presentation of Improvements vs. Depreciation and Dilapidation
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Ongoing preventative maintenance can appear costly at the time, but will preserve the quality and life of your asset.
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Regular attention to any simple landscaping or gardening to relevant parts of the property can dramatically improve the property's appearance.
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Ensuring paint work and signage is periodically maintained can have a large impact on the perception of a property and its value.
Compliance with Occupational Health & Safety, or Environmental Regulations.
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Occupational Health & Safety (workplace safety) is becoming an issue of paramount importance. Ensuring that the environment you offer either for; tenants to operate from, potential purchasers to buy, or for your own staff to operate within, will have a direct impact on the value of your property.
How much work would be required to bring any substandard property up to full compliance?
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There are often no half measures when assessing the landlord's/director's responsibility for compliance with the OH&S Regulations. A fully compliant property can become very attractive when considering options within the market.
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Consideration and compliance of environmental issues associated with any commercial property will directly impact on the asset's underlying value. Commercial properties that operate in contravention of Australian environmental regulations may create a potential liability, which could adversely impact the capital value of your property.
Including the above in your property assessment criteria should assist you in either maximising the potential of your property or in spotting a property with unfulfilled potential.