Looking to Buy an Office - Nothing Available
Discussion
For about 6 months I have been looking to purchase an office somewhere around the M1-M40 corridor between Milton Keynes and Coventry with decent transport links. Budget around 400K, looking for something to accommodate a company of 3 software developers and then sublet the rest of the space. My search is proving fruitless. Month to month the same properties are appearing. The market seems very static - is that the case? Has anyone got any experience/advice/leads I could follow up? Is it the case that rather than doing web searches its better to find a friendly agent and get "tip offs" for properties coming on to the market before they hit the web? Any help/advice much appreciated.
One problem we found when purchasing a free hold industrial property is it appears undervalued compared to the rents so people are happy to hang onto it !
As it happens we brought in Shefford, we got the property bargain of the century, 4000 sqr ft unit , air conditioned offices upstairs and parking for 12 + cars for £153k , we got lucky (2016) I think it was a one off but who knows
As it happens we brought in Shefford, we got the property bargain of the century, 4000 sqr ft unit , air conditioned offices upstairs and parking for 12 + cars for £153k , we got lucky (2016) I think it was a one off but who knows
MrVert said:
How much space do you need?
I guess the answer is "as much space as I can get for the money". The kind of places I've been turning up are in the 1000-3000 sq ft range. Other facilities are more / less important depending on location eg. the further it is from a train station the more that the number of car parking spaces becomes important, if there is nowhere nearby to get lunch the more it needs kitchen facilities etc.Shefford would be the "wrong" way for me. I'm looking in the M1/M40 corridor - I currently live in Milton Keynes with clients north of Rugby so I mostly centre a search on Daventry and work out from there.
matjk said:
One problem we found when purchasing a free hold industrial property is it appears undervalued compared to the rents so people are happy to hang onto it !
I guess this is the problem I am coming up against. I know nothing about the market and naively thought there'd be a reasonable turnover of properties every month or so.
I wouldn't dismiss an old pub, one of our customers have their offices in an old pub, its still called Red Lion House and is fantastic.
They converted most of it, but kept the old bar in place.
We are in a similar situation, a software house looking to buy and have been struggling to find anywhere. A lot of commercial property now seems to come with planning permission for additional new builds or flats. Seems we are eventually going to run out of commercial property once everyone has made money making residential sales.
I did look at an old methodist church recently, which I thought was really cool, but the high ceilings would have been a nightmare for cables, lighting and heating. Reminded me of 21 Jump Street, they had their base of operations in an old church.
They converted most of it, but kept the old bar in place.
We are in a similar situation, a software house looking to buy and have been struggling to find anywhere. A lot of commercial property now seems to come with planning permission for additional new builds or flats. Seems we are eventually going to run out of commercial property once everyone has made money making residential sales.
I did look at an old methodist church recently, which I thought was really cool, but the high ceilings would have been a nightmare for cables, lighting and heating. Reminded me of 21 Jump Street, they had their base of operations in an old church.
I don't know the area you are looking, however I am a commercial property surveyor in the north, part of my remit being agency.
The market for freehold offices is very buoyant, however I imagine you are facing the same issues as most other places, namely:
1. Any offices with character are being converted to residential.
2. There has been little or no development of new stock since the crash.
3. People aren't selling as they are still getting good returns, far better than nearly all other investments.
4. You are looking at a lot size (£400k) that is within most people's/ businesses reach without the requirement for any additional funding.
5. There's a lot of people in the same boat as you.
I just sold one that sounds like what you were looking for (albeit 200 miles away), went for 25% over where we had valued it!
Make sure you are registered with agents, drop a line to places you like the look of.
The market for freehold offices is very buoyant, however I imagine you are facing the same issues as most other places, namely:
1. Any offices with character are being converted to residential.
2. There has been little or no development of new stock since the crash.
3. People aren't selling as they are still getting good returns, far better than nearly all other investments.
4. You are looking at a lot size (£400k) that is within most people's/ businesses reach without the requirement for any additional funding.
5. There's a lot of people in the same boat as you.
I just sold one that sounds like what you were looking for (albeit 200 miles away), went for 25% over where we had valued it!
Make sure you are registered with agents, drop a line to places you like the look of.
The next hurdle you have is the valuation, (assuming mortgaging). We had a property fall through as the banks tent to under value what the market rate is. As you know free hold industrial as like hens teeth, hence demand is high, hence prices should be high, but the bank values it as a multiplier x sqr ft rental rate. Hence you end up with a situation in our case, we agreed a sale at £240k, valuer came back with £210k, there was absolutely nothing withing 100 miles similar for sale , plenty of cheap rental at silly low sqr footage rates, and this is what distorts the market.
It seems to me a commercial property rents are about 12% of value per year, so if you have an asset that pays out around £1000 gross a month its market value (according the the banks) about £120k , you cant buy a studio flat round here for less than about that but that will rent for £550, hence why people just hang on to them
It seems to me a commercial property rents are about 12% of value per year, so if you have an asset that pays out around £1000 gross a month its market value (according the the banks) about £120k , you cant buy a studio flat round here for less than about that but that will rent for £550, hence why people just hang on to them
matjk said:
The next hurdle you have is the valuation, (assuming mortgaging). We had a property fall through as the banks tent to under value what the market rate is. As you know free hold industrial as like hens teeth, hence demand is high, hence prices should be high, but the bank values it as a multiplier x sqr ft rental rate. Hence you end up with a situation in our case, we agreed a sale at £240k, valuer came back with £210k, there was absolutely nothing withing 100 miles similar for sale , plenty of cheap rental at silly low sqr footage rates, and this is what distorts the market.
It seems to me a commercial property rents are about 12% of value per year, so if you have an asset that pays out around £1000 gross a month its market value (according the the banks) about £120k , you cant buy a studio flat round here for less than about that but that will rent for £550, hence why people just hang on to them
It will be a cash purchase through a pension, not mortgaged, but that's an interesting view on the market, thank you.It seems to me a commercial property rents are about 12% of value per year, so if you have an asset that pays out around £1000 gross a month its market value (according the the banks) about £120k , you cant buy a studio flat round here for less than about that but that will rent for £550, hence why people just hang on to them
loafer123 said:
Permitted Development rights whereby offices can be converted into residential quickly and easily has taken huge amounts of stock out of the market, so the advice above about thinking laterally is good.
Had to have a chuckle at this - ever seen a 4 bedroom office before?http://www.rightmove.co.uk/commercial-property-for...
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