Commercial Property
Issue No. 27 - February/March
Commercial purchasing criteria
by Dr David Corkindale and Dr David Corkindale
The past two years have seen the Adelaide commercial real estate market enter a boom period and enjoy one of the strongest demand cycles for many years, says Kel Spencer, Stanley Thompson Valuers Managing Director.
The commercial market is riding on the back of a strong residential market, which entered the cycle in 2001.
Part of the commercial sector is the CBD office market, which has entered a period of strong construction. This will underpin a significant increase in the available stock of commercial office space.
Kel says notwithstanding important issues such as the passing yield, capital gain prospects, letting-up prospects and quality of tenant, there are a number of key characteristics that need to be considered which have an implication for value.
These characteristics of a commercial property may be summarised under physical, legal, locational, psychological and environmental groupings.
Physical characteristics
Size, shape, layout, frontage, depth, soil, gradient, view and outlook plus non-building improvements including services, fencing, gardens, landscaping, retaining walls and paving.
Legal characteristics
Legal restrictions, easements, rights of way, rent controls, development control, pressure groups (usually local community groups) and any zoning implications etc.
Locational characteristics
Vehicle and pedestrian separation, rights of way, adjacent roadways, ease of access, visibility, capacity, safety, plot ratio (vehicle to people), neighbourhood characteristics, space relationships etc.
Psychological characteristics
Neighbourhood perceptions, property perceptions (view and outlook), kerbside appeal, safety issues, market perceptions, general locality, social prestige, visual quality, density of traffic flows, noise, pollution, quality of maintenance, initial impressions, quality of surrounding buildings, value for money considerations. Cost does...
