When it comes to investing in commercial property there are a number of key choices you need to make. An important choice comes in the form of the work you are looking to put into an investment. If very little, then you will be looking to buy a property that is fully functional. However, in some cases, you may be looking for a property that needs a great deal of work and refurbishment in order to be a viable commercial property once again.
Here at Roger Hannah & Co, our team of experts offer building consultancy for a number of different stages in your property ownership and management. For that reason, here are a few of the most important considerations you need to make prior to committing to the refurbishment of a commercial property.
Consider the Risk
Not all run down buildings are a potential goldmine. For this reason, it is important to consider the viability of an investment and whether it poses any substantial financial risk. If yes, then looking for a better property may be a more ideal solution. It’s also the case that some risks do pay off in the end and so may also be worth taking. There are a few things that you can consider in order to make this decision that much easier.
The Location of the Property
If a property is located in a prime area or even an up and coming area, then it very well may be worth refurbishing. It’s an old phrase and thrown about often, but ‘location, location, location’ does need to be heavily considered here.
A commercial building which is located in an undesirable location, on the other hand, is often not worth the investment it takes to refurbish. Simply put, if it is in the wrong location it will not yield the profit needed post-refurbishment.
Is the Market Stable?
Often, this type of question can be compared to that of how long is a piece of string. It changes, fluctuates and can be very different from beginning to the end of a project. Also, consider supply and demand. If you refurbish a commercial property for use as offices, then, you need to be aware of the vast number of offices already available on the market. Should you choose to refurbish it needs to be in order to supply a commercial space that will be in demand.
Refurbishment may mean the need to make updates or significant changes to a building. If the building is listed or in a conservation zone, then this becomes highly difficult. Therefore, any refurbishment work may be hindered or extremely limited by the level of planning permission available. In such cases, it may be a bad investment overall.
Where’s the Profit?
Once work is completed, where will the profit come from for this building? Will it be through renting to other businesses, selling it outright or a mixture of the two? Refurbishing a building without any consideration as to what comes AFTER is a very big mistake. This comes back to supply and demand. Make sure you are supply something which, once complete, will actually sell or rent out in order to ensure profitability.
If you need guidance or further information in regards to your refurbishment plans, then get in touch with our team at Roger Hannah & Co via our contact form or 0161 817 3399.