Purchasing a Small Commercial Office in Perth - Pros and Cons

Countryboyperth on 08/05/2024 - 12:40
Last edited 08/05/2024 - 16:23 by 1 other user

Hi, I am planning to purchase a small commercial office in Perth southeast area.

The office is part of a 12 office strata complex. Office is not directly exposed to the public view but slightly hides from the road views. The complex is old (40 years). The office is 38m2 and has the door in slantish type front wall. At least 32m2 of rectangular space is available.

The train station is 300m away and is being redeveloped.

Wondering for what kind of business purposes this kind of small office space will be used? Is it worth to buy such a small office? This small office will be leased and not for my personal use. Is it safe to assume $150/m2 per year of rent after all outgoings?

Any queries please let me know. Your feedback or productive comments are much appreciated.

Thank you

Financial

Comments

  • Jake D on 08/05/2024 - 12:48
    +5

    This is a bad idea

    • BOGOF on 08/05/2024 - 12:51
      +3

      Your profile avatar perfectly fits your comment

      • Jake D on 08/05/2024 - 14:05

        Way too often.

  • 1st-Amendment on 08/05/2024 - 13:14

    Wondering for what kind of business purposes this kind of small office space will be used?

    What are the other 11 tenants using theirs for?

    Do you want it to use or to rent out?

  • El cheepo on 08/05/2024 - 13:18

    Assuming you want to buy to rent it out?

    Wondering for what kind of business purposes this kind of small office space will be used?

    Reading between the lines a bit here but…
    Are there any other questionable businesses there?

    Is it worth to buy such a small office?

    What does your market research tell you? What kind of returns do you want and how long do you plan to hold it for?

    Edit: is it the one in Victoria park with a few in the complex for lease? If so, looks like a poor investment imo… YMMV

  • w0mbat on 08/05/2024 - 13:19

    what is foot traffic like (number of unique passes per hour for each business hour)
    onsite parking
    Are there council rules on the type of businesses there?

    Do all your costs (purchase price, renovations, strata, rates, insurance) get covered by the rent you charge?
    Can a small shop make enough profit to cover your rental charge?

    if you don't know what sort of business would go in there are you planning on just leaving it empty till someone comes knocking?

    I would not be pursuing this unless you have another reason to have a commercial property and leave it empty.

  • Countryboyperth on 08/05/2024 - 13:25

    My post updated.

  • Muzeeb on 08/05/2024 - 13:35

    Meth lab

  • Switchblade88 on 08/05/2024 - 13:42
    +4

    I am planning to purchase a small commercial office

    what kind of business purposes this kind of small office space will be used?

    So you want to buy an office but don't know why you'd use said office?

  • websterp on 08/05/2024 - 13:53
    +1

    Perfect for a "solo massage operator'. You can charge more if it is the special "happy ending" type with extras.

    Small but big enough for a massage bed, hidden away from the public, old and run down, close to the train station, etc.; Has all the prerequisites for a successful operation.

  • ifyareckon on 08/05/2024 - 14:01

    Google the address, likely the previous tenants will come up in the search. This will give you an idea on likely tenants.

  • JimmyF on 08/05/2024 - 14:43

    Wondering for what kind of business purposes this kind of small office space will be used?

    Being it is 40 years old, what has been in there before? Might give you a clue.

    Is it worth to buy such a small office?

    Depends on the price.

    This small office will be leased and not for my personal use.

    So an investment?

    Is it safe to assume $150/m2 per year of rent after all outgoings?

    What are the other places renting for? That's $5.7k after outgoings? What sort of % return is that?

  • Countryboyperth on 08/05/2024 - 15:44

    6%

    • mskeggs on 08/05/2024 - 17:52
      +1

      Commercial property should return 7% gross, as a rule of thumb. Strata costs aren't included in that in your case, as it is building insurance and maintenance.
      Tenants usually pay all outgoings.
      Small offices can be hard to rent, even more so these days when people are pretty used to dealing with home based businesses.

      I would like to know past rental terms, and the vendor can likely advise. I would hesitate if you need finance, as commercial loans are currently over 7%.

  • brendanm on 08/05/2024 - 16:31
    +5

    I want to buy a train, how many people would ride my train? It will have a slant front, how much does it cost to build the tracks? Will people pay $1 per 10km for my train?

    • mskeggs on 08/05/2024 - 17:54

      Gonna need you to tie this in with the 300m distant station to get the full picture.

  • sumyungguy on 08/05/2024 - 22:19

    Postcode 6112? A low-yield investment if not currently tenanted.

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