LJH Commercial

LJ HOOKER COMMERCIAL MACARTHUR 011 Using the market to the advantage of an asset Understanding market conditions is critical for any investor. They need to consider many factors, including: • undersupply and oversupply; • changes in consumer behaviour; • future infrastructure; • population changes. Undersupply and oversupply If an investor purchases a shop front suitable for a takeaway food operator when there’s already a glut of vacant retail spaces, the asset will present challenges. An oversupply of properties means tenants have more choice and power in lease negotiations. Conversely, when there is a construction boom, warehouses that can store stock such as timber, roofing materials and other housing essentials are in high demand. Supply chain tenants will pay premium rents to secure facilities so they can capitalise on demand. Changing consumer behaviour It’s clear that people’s behaviour can determine the worth of commercial property assets. For instance, an increasing number of professionals choose to live in the inner-city, working longer hours in the process. When they get home, they prefer to relax instead of cook and clean. This demographic change has given rise to a demand from restaurant, takeaway and coffee shop operators for retail spaces in nearby streets. It’s also created demand for chilled storage facilities for pre-packaged meals that suit the lifestyles of young professionals, as well as gyms. Future infrastructure New or improved roads, rail and port facilities create efficiencies for businesses. If infrastructure helps them get from A to B faster, or brings more clients to their front door, their bottom line will become stronger. Plus, they’ll be prepared to pay higher rent and commit to a longer-term lease for the additional benefits. Proximity to future arterial roads is a major consideration for transport and logistics tenants, while access to new bus or train stations makes it easier for professional businesses in IT, health, finance and other sectors to attract staff. Population growth As several capital cities have undergone significant increases in median house prices, many families have been seeking affordable housing alternatives in outer city corridors or regional centres. An increase in younger children living near or beyond industrial hubs has seen the repurposing of vacant factories as indoor sport or amusement centres housing trampolines. Where some regional areas used to only have a town centre, neighbourhood shopping centres are being developed on the fringe of new housing estates. A commercial property specialist will educate an investor on the reliable and emerging market opportunities, using their expert knowledge to help the investor in their strategy, avoiding the need for luck.