Commercial property needs more due diligence than comparing price per square foot.
The value of an occupied building depends partly on the leases, tenants, operating costs and permitted use.
Verify the land and building
Start with the registered property.
Check the title, seller, charges, restrictions and any leasehold conditions.
Then confirm that the building and its current use are consistent with the relevant approvals and planning position.
Read the leases
If tenants are already in place, ask for the tenancy documents.
Build a schedule showing:
- tenant
- space occupied
- current rent
- deposit
- lease expiry
- rent-review terms
- arrears
- service charge
- break or renewal provisions
Do not value the building from verbal rent figures.
Check vacancy
A partly empty building can offer upside, or it can be telling you something about demand, access or condition.
Find out how long spaces have been vacant and what rent has actually attracted tenants.
Understand the operating costs
Ask who pays for:
- security
- cleaning
- common electricity
- lifts
- water
- insurance
- rates
- repairs
Gross rent can look attractive while net income is weak.
Inspect access and parking
Commercial tenants care about customers, deliveries and staff.
Check:
- frontage
- parking
- loading
- pedestrian access
- public transport
- traffic restrictions
Consider tenant concentration
A building where one tenant pays most of the rent carries a different risk from one with many independent tenants.
Ask what happens to the income if the largest tenant leaves.
Use a full acquisition model
Add the purchase price, transfer costs and any immediate capital expenditure.
Then compare that total with realistic net income, not with an advertised “return.”
Akama’s Solar House is an example of a commercial listing where title, location, building condition and usable space should be assessed together.