The commercial and industrial market place continues to power forward.
Whilst existing property owners are enjoying a long and sustained uptrend in capital values and consistent yield compression, many buyers looking to enter the market are finding it harder and harder to find suitable options.
Many investors often wait in the wings for the right opportunity to meet their criteria. This is generally a combination of a secure income and tenure plus a capital growth strategy.
For owner occupiers this equation is not as simple. Quite often, fundamentals in an owner occupier's business can change, placing demands on their property requirements. From a growth perspective this can include winning a new contract or landing a new major customer.
This situation can arise in high growth areas such as Western Sydney where major infrastructure projects are regularly awarded. For a company winning long term road upgrades, North West rail line construction or Badgerys Creek airport contracts can place demands on a business for more space.
Why an off market sale can be a win-win
These market forces combined with diminishing supply have created an uneven 'supply and demand' equation in different market segments of the commercial market place. The net result has forced the increase in capital values and also created a strong "off market" culture for experienced agents.
When a company cannot source a property via the traditional sources of the internet and typical real estate marketing they are utilising the resources of an agent to source "off market opportunities".
That is, we as agents approach property owners who are not actively in the market. Often resulting in a "win win" outcome where a business satisfies its need for space and the owner achieves a premium for a sale or a tenant for a building ahead of a pending vacancy.
Over the past year PRD Commercial has been involved in over $50 million worth of this style of transaction. Recently the sale of 32 Peachtree Road, 1 Coombes Drive and 20-30 Gordon St Penrith were all "off market". At present we are negotiating on over $100 million dollars of off market transactions.
Robert Tappouras, Director of PRD Commercial said "As we were approached to offer the property we already had willing qualified buyers ready to perform and the properties were snapped up quickly".
In addition, we have also been involved in arranging purpose built facilities where a company can not find a suitable existing property and has a property built specifically for their use. In turn, they take a long term lease and all parties secure a "win win" situation.
"When selling or leasing many sophisticated property owners utilise this strategy to target specific buyers and tenants for their property. Our extensive database contains qualified decision makers who want a result" said Mr Tappouras
"Whilst we often recommend extensive public campaign there are occasions when an off market strategy suits the transaction. We are finding the lack of supply is also driving demand from buyers and tenants to ask us to pose question of existing owners about their intentions for their properties"
Increase in Asset Management requests
We also find we are being engaged more and more from investors looking for a fresh set of eyes on how to maximise their commercial investment property returns. Our asset management expertise often results in ways to increase a rental return or maximise capital values. Interestingly, the increase in value and equity usually results in another commercial property acquisition.
Often investors don't review their assets regularly enough. "My passion is analysing a property in its entirety and using my experience to maximise and uplift an investor's value and return," said Robert Tappouras.
Our team also specialises in assessing development sites by providing up to date data for analysis via a comprehensive feasibility study. "We are finding land owners want to truly understand the land value they own. We can demonstrate this by walking owners through the process and also introducing them to active buyers with the ability to purchase. This is general undertaken before the property hits the open market.
Off market transaction are simply part of the changing landscape of the modern marketplace. Technology, resources and relationships are being leveraged with the net result being a dynamic new market place.
If you would like to discuss a property requirement or are thinking of selling, leasing or require an asset management overview feel free to call Robert Tappouras on 0413 942 044 for a confidential discussion.