Advice sought on making offer on industrial units
Discussion
A property management company I know of are away to put at least 7-8 units all in close proximity to each other on the market on behalf of a client. The units are 1,200 to 3,000 sq ft. I've got a price on one particular unit from the company doing the surveying and the asking price is £35 sq ft. Normal valuation on these units would be £25-35 according to another contact of mine who knows their stuff.
Now, the interesting part. The company that actually owns the properties has been in administration for some years. 2 of the units are let but the rest are vacant (technically one is still let till February but the tenant has moved out and this is in the unit which will be most expensive to rent and pay rates on). 2 of the units which are vacant are full of old junk, probably need a bit of work doing and have been vacant for a number of years. 1 of the units which has been let out was vacant for around 5+ years until this year.
The properties are solid enough. Built in the 70's with asbestos-concrete roofing, they're not much to look at but an alright place to situate a business.
There's 3 properties I'm considering putting offers in on before they go to market. 1 is let and the other 2 are the ones mentioned above that have been vacant for a while and need work.
I've been giving this some thought and I don't see anybody paying much money for a portfolio of properties where 25% of them are currently let out and the last few years rate is at best 40%. To cut to the chase, I was wondering if anybody with experience in buying industrial units or similar could give me some advice on whether a low-ball offer would work?
Now, the interesting part. The company that actually owns the properties has been in administration for some years. 2 of the units are let but the rest are vacant (technically one is still let till February but the tenant has moved out and this is in the unit which will be most expensive to rent and pay rates on). 2 of the units which are vacant are full of old junk, probably need a bit of work doing and have been vacant for a number of years. 1 of the units which has been let out was vacant for around 5+ years until this year.
The properties are solid enough. Built in the 70's with asbestos-concrete roofing, they're not much to look at but an alright place to situate a business.
There's 3 properties I'm considering putting offers in on before they go to market. 1 is let and the other 2 are the ones mentioned above that have been vacant for a while and need work.
I've been giving this some thought and I don't see anybody paying much money for a portfolio of properties where 25% of them are currently let out and the last few years rate is at best 40%. To cut to the chase, I was wondering if anybody with experience in buying industrial units or similar could give me some advice on whether a low-ball offer would work?
Fifteen years ago we bought our Commercial Unit. It was up for £705k and we offered £350k. We settled on £450k as the large multinational owner needed it off the books before the tax year end.
No harm in being a bit cheeky.
Remember Stamp Duty and fees.
Any money in your SIPP to buy them?
No harm in being a bit cheeky.
Remember Stamp Duty and fees.
Any money in your SIPP to buy them?
I wouldn't chase. From experience in what my clients are buying those type of units can go down to around 10-15 psqft.
Probably won't go to auction, they will just sit for sale for a while.
I personally would get a surveyor to advise you. They will save more than they cost.
FYI - I bought my offices from the administrators at £240k via a surveyor, they were up at £450k
Cost for surveyor 1%finders fee inc survey
Probably won't go to auction, they will just sit for sale for a while.
I personally would get a surveyor to advise you. They will save more than they cost.
FYI - I bought my offices from the administrators at £240k via a surveyor, they were up at £450k
Cost for surveyor 1%finders fee inc survey
Jockman said:
Fifteen years ago we bought our Commercial Unit. It was up for £705k and we offered £350k. We settled on £450k as the large multinational owner needed it off the books before the tax year end.
No harm in being a bit cheeky.
Remember Stamp Duty and fees.
Any money in your SIPP to buy them?
no SIPP at all. No harm in being a bit cheeky.
Remember Stamp Duty and fees.
Any money in your SIPP to buy them?
ETA- just for clarity, I'm 28 and have no pension.
Edited by ModernAndy on Tuesday 22 November 19:52
insurance_jon said:
I wouldn't chase. From experience in what my clients are buying those type of units can go down to around 10-15 psqft.
Probably won't go to auction, they will just sit for sale for a while.
I personally would get a surveyor to advise you. They will save more than they cost.
FYI - I bought my offices from the administrators at £240k via a surveyor, they were up at £450k
Cost for surveyor 1%finders fee inc survey
£10 sq ft would certainly make it doable. Even if that's only on the 2 vacant units. Probably won't go to auction, they will just sit for sale for a while.
I personally would get a surveyor to advise you. They will save more than they cost.
FYI - I bought my offices from the administrators at £240k via a surveyor, they were up at £450k
Cost for surveyor 1%finders fee inc survey
As said above, don't forget the stamp and vat but also:
1. Stamp is on the price including vat and can bump it into another tier, this got me
2. Rates are payable (as it's likely the current owner will have used the allowance) on vacant units. However it's usually not payable if there are significant works to refurb the units going on
1. Stamp is on the price including vat and can bump it into another tier, this got me
2. Rates are payable (as it's likely the current owner will have used the allowance) on vacant units. However it's usually not payable if there are significant works to refurb the units going on
insurance_jon said:
2. Rates are payable (as it's likely the current owner will have used the allowance) on vacant units. However it's usually not payable if there are significant works to refurb the units going on
The 2nd sentence is out of date. Its a total nightmare at the moment to get a property removed from the Rating List if it needs or is undergoing works. I am dealing with a proeprty that burnt down in February and was demolished it is still in the List and having rates paid on it.I had a word with the surveyor's/property consultant's agent who is being tasked with getting the units sold earlier today. It sounds like they are going to put the properties to market if they can't get close to £30 sq ft for unoccupied units and £35 sq ft for occupied units. I think it's time for me to speak to a surveyor. Would they go under a different guise such as 'commercial property consultant'?
ETA- is a statement of reasoning for an offer which would otherwise be considered low a good idea?
ETA- is a statement of reasoning for an offer which would otherwise be considered low a good idea?
Edited by ModernAndy on Wednesday 23 November 13:00
From what you have said I would be cheeky and offer half the rate.
As another poster has mentioned it has happened in the past.
A friend was an MD of a company local to be, they were winding down UK operations and wanted rid of the building. THey have it advertised for 600k and someone made an offer of 300k.
They agreed on 350k. It was 30,000 sq ft warehouse with 25% built as office. It was a lovely lovely building.
As another poster has mentioned it has happened in the past.
A friend was an MD of a company local to be, they were winding down UK operations and wanted rid of the building. THey have it advertised for 600k and someone made an offer of 300k.
They agreed on 350k. It was 30,000 sq ft warehouse with 25% built as office. It was a lovely lovely building.
XMT said:
From what you have said I would be cheeky and offer half the rate.
As another poster has mentioned it has happened in the past.
A friend was an MD of a company local to be, they were winding down UK operations and wanted rid of the building. THey have it advertised for 600k and someone made an offer of 300k.
They agreed on 350k. It was 30,000 sq ft warehouse with 25% built as office. It was a lovely lovely building.
The surveyor has expressly told me that such an offer would be declined but I'm not one to give up that easily.As another poster has mentioned it has happened in the past.
A friend was an MD of a company local to be, they were winding down UK operations and wanted rid of the building. THey have it advertised for 600k and someone made an offer of 300k.
They agreed on 350k. It was 30,000 sq ft warehouse with 25% built as office. It was a lovely lovely building.
some experience of this as we have just done it 5 months ago. 4000 sq/ft building, belonged to a VERY large supermarket chain, they have been having a few, shall we say 'financial issues' and decided to sell off big chunks of property they owned. The agent responsible for selling it valued it at £230'000 but said he might be able to swing it for £200'000 if he put a really good case together to the owner. We offered £175k, and where told we where no where near. We left it 3 months and heard nothing, then we get contact saying they are a little bit more motivated to sell, they want final and maximum offers & if we upped the offer just a smidge it could ours. I wasnt as keen so we offered them £150k expecting them to say 'get lost' but the next day we get a call saying the offer has been accepted.
To give a clue, our unit is just a few down from this one, ours has a full mezzanine with fully fitted out offices and aircon and has 2 car parks with spaces for 20 cars and is up for £225k http://bls.agencypilot.com/store/documents/other/4...
Be careful on the rates, the empty building you will be fully responsible for the day you take ownership. You will not get the 6 months grace, this has been used up by the previous tenant, changing ownership does not reset the clock, doesnt matter if its habitable or not, as we found out to our expense as we had the unit fully re-fitted.
To give a clue, our unit is just a few down from this one, ours has a full mezzanine with fully fitted out offices and aircon and has 2 car parks with spaces for 20 cars and is up for £225k http://bls.agencypilot.com/store/documents/other/4...
Be careful on the rates, the empty building you will be fully responsible for the day you take ownership. You will not get the 6 months grace, this has been used up by the previous tenant, changing ownership does not reset the clock, doesnt matter if its habitable or not, as we found out to our expense as we had the unit fully re-fitted.
ModernAndy said:
Central Scotland. I've got a recommendation from a legal professional for a person who I'll be speaking with tomorrow.
Unfortunately I don't know anyone up there, but if your suggested person can't help then look for a local commercial property consultant and they should be able to help you out.The usual rules of engagement, so I've found, don't apply to units that small...
When we were looking for our unit about 2 years ago - virtually every 1,000-3,000sqft industrial unit was to let only.
Agents said that because landlords can let these properties so easy to startup's/etc they are rarely for sale. When they do come up for sale it's always for a decent price unless the vendor is up the creek without a paddle.
Our unit just outside of central Manchester was £110k + VAT and it's a 2,500ft2 unit (so £44 + VAT/ft2). That represented an absolute bargain for what was around at the time (and still is very, very cheap) for a unit that size and location.
Next door to ours (which is 1875ft2) went for the same £44 + VAT/ft2 too.
HTH - can only speak from my experience though!
When we were looking for our unit about 2 years ago - virtually every 1,000-3,000sqft industrial unit was to let only.
Agents said that because landlords can let these properties so easy to startup's/etc they are rarely for sale. When they do come up for sale it's always for a decent price unless the vendor is up the creek without a paddle.
Our unit just outside of central Manchester was £110k + VAT and it's a 2,500ft2 unit (so £44 + VAT/ft2). That represented an absolute bargain for what was around at the time (and still is very, very cheap) for a unit that size and location.
Next door to ours (which is 1875ft2) went for the same £44 + VAT/ft2 too.
HTH - can only speak from my experience though!
My unit will finally be off my hands in a few weeks and I can't wait to see it go, service charge, rates, repairs etc etc if I ever need space again it will be within a flexible storage facility.
Not everyone's solution I know but suits me - paid £240 / 4500 in 2005 got £265 after putting in a mezzanine.
For info the buyer wouldn't buy without a certificate the VAT was paid when new, we can't find it and HMRC will only send it to the empty property.
Not everyone's solution I know but suits me - paid £240 / 4500 in 2005 got £265 after putting in a mezzanine.
For info the buyer wouldn't buy without a certificate the VAT was paid when new, we can't find it and HMRC will only send it to the empty property.
The thing I'd emphasise about this is that the units are all on 1 small street and have had an exceptionally low occupancy rate. There's also plenty of units in the surrounding areas for let. It would be an awful lot of work and money to get them all filled and all the while they're costing the owner in rates.
Don't feel at all bad or reluctant about putting in what you consider a cheeky offer if the building is right for you. First of all they can only say no and secondly I'm not sure if the Estate Agency Act applies in Scotland but if there is an agent or surveyor involved they are legally obliged to put forward all offers, so don't feel as if you are being fobbed off.
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