Hi there,
First time investing in commercial property – am looking at a studio space with a private balcony.
Was wondering whether it was the norm to include this additional space in my sqm rental projections?
Regards,
NP
Are you the leasor or leasee & is this to borrow against or earn income from? I think development marketers and leasors do, lenders don’t for loan purposes. Could be wrong.
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MelMel,
I’m a leasor – earning an income from it. To be safe Im excluding the balcony at this stage from my sqm rentals calcs.
Thanks for the tip.
NP
If you’re the lessor, the lessee should be paying rent for every single square metre that the lease covers, including balconies. Of course, market forces may dictate that you discount the rent per sqm for the balcony portion.
If I were you, I’d either go and do some thorough research to work out a fair market rental for your property, or simply ask an agent to give you a rent appraisal.
Cheers
MHi Yoyo,
I’m a commercial leasing agent and thought I might have a go at this one.
The area of the property you are able to charge rent for is the Net Lettable Area. In a commercial situation (ie office space) the NLA as defined by the Property Council of Australia (PCA)excludes areas such as balconies, common areas etc. If you were to charge for it it would be by way of a seperate licence agreement as per signage or seating rights outside a cafe.
If you wanted to be cheeky you could possibly charge a rate besed on the total stata area or a weekly/monthly rate with no reference in the documentation to the size at all.
You’re more likely to be successful with either of these methods in smaaller tenancies as it is more common.
So whilst technically you can’t include it in the NLA it is worth noting that the space you do have will probably be more valuable by virtue of the fact that it will be “that place with the balcony”Good Luck with it
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