Hi guys….
I own an office suite in an inner city suburb of Melbourne,in a brand new building.I,along with a few other owners,am still looking for a tenant.The building is superior to anything else in the area,and as such we have been seeking (and many have already achieved)premium rates in excess of $300 per square metre.We are prepared to wait a little while to achieve these rates,or at least that was my understanding.There are 3 or 4 agents acting on behalf of the owners still looking for a tenant.I only found out recently that some of these agents (not mine) have been approaching tenants already occupying suites,and offering rates as low as $210 per metre,plus half price car parks,effectively devaluing the whole building.I am disappointed that owners are backstabbing other owners,but more so with the unethical,immoral,sly actions of the REAs.If we didn’t need them,they would be stacked ten high at the tip.Maybe I don’t need them,and it is time to show them that.
Tools
This is a good indication of some of the downsides of commercial investments for the beginner.
Thanks Tools and I am sorry I don’t have any suggestions as to how to tackle this problem,
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Sounds like they are overvalued if you cannot find tenants at $300.
Who set the intial rate? Was it a developer?
Hi Yack,
No,I don’t think they are overpriced.In fact,my valuation came back $30,000 over what I paid for it.You have to remember also that there are 69 suites that were searching for a tenant all at once.Many have found tenants at the rate I spoke of,but some others must be struggling with their mortgages and are prepared to take a tenant at any cost,without realising they are contributing to lowering the value of the whole building.If thats the case, then surely its just a short term problem. I believe in market forces and eventually the market will determine the rate when supply = demand.
Presently you have a Big Supply of office suites.
Originally posted by Tools.:Hi guys….
I own an office suite in an inner city suburb of Melbourne,in a brand new building.I,along with a few other owners,am still looking for a tenant.The building is superior to anything else in the area,and as such we have been seeking (and many have already achieved)premium rates in excess of $300 per square metre.We are prepared to wait a little while to achieve these rates,or at least that was my understanding.There are 3 or 4 agents acting on behalf of the owners still looking for a tenant.I only found out recently that some of these agents (not mine) have been approaching tenants already occupying suites,and offering rates as low as $210 per metre,plus half price car parks,effectively devaluing the whole building.I am disappointed that owners are backstabbing other owners,but more so with the unethical,immoral,sly actions of the REAs.If we didn’t need them,they would be stacked ten high at the tip.Maybe I don’t need them,and it is time to show them that.
Tools
Why not try to do your own legs work by do your own advertise at the same time.
Warm Regards
ChanDollars
[Keep going, you’re on your way to financial freedom]Maybe find out what is in demand in the area, and spend a small amount of money setting it up to suit a particular client, may reduce the amount of people that may be interested, but may increase the chances of that one person that is humming and haring about leasing it. I hope that made sense?
Regards Bear
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DONT MISS OUT!!!!!In other words offer more and charge more.
About 7 years ago, there was a big Harley tours price war on, and guess what I did, I went and put my prices up. While every one was running around trying to get business and running either at a loss or breaking even, I put my prices up. And guess what happened. I got more work and a change of clientele. I started to get all the lonely bored housewife’s and Drs and Lawyers booking me for Harley tours.
Creative thinking works real well. I know your circumstances are different, but it’s just an example of how things that seem negative can be turned into a positive.
Hope this makes thing clearer for u Tools. Im not very good at explaining things in writting at times.
Regards Bear
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DONT MISS OUT!!!!!Tools,
I am afraid that the open market will mean people will charge rents at whatever they wish, and i am not sure that´s disloyal to other vendors. Think of our units in an apartment block for rents- we set our own price- it is not centrally set. Some vendors would obviously prefer to get less rent for more weeks per year. In fact, rental projections are only that- it´s probablz why some people are so fond of rental guarantees- at least it´s something. The free market economy is not always a fair one.
I agree with Bears- you´re going to have to invest some capital into your investment- maybe put in some aircon, or fully furnish it… something to distinguish it from the general mass of the rest of them. Generic office suites are progbably like generic apartment blocks- they really need that distinguishing quality- that´s if zou wanna keep the rents up. Otherwise you might have to play the open market game- lower rents for a more competitive market.
kay henry
How about looking at businesses already in the area. Do some door to door canvassing and you may find that a few are comming to the end of their lease, have some more money to spend because:
1. Most businesses have been pretty healthy lately
2. Some businesses may wish to show their clients a nice presence or street frontage and would be willing to pay a little more for a brand new office.Also, see what businesses are in the area and then do some research. If there are lots of architects for exapmle, canvass architects that are in other areas. It is the same in Sydney, there are always groups of similar businesses in close proximity to one another.
As Chan$ pointed out, it may require some legwork, but wouldn’t you just love to show the other investors in the building that it can be done and that YOU are making money not losing it!
Good luck.
‘Eat rich food, barbeque a yuppie’
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