With its strong economy, tourism potential and excellent climate, the Mount Gambier region on South Australia’s Limestone Coast offers excellent growth prospects.
Commercial property in Mount Gambier
Encouragingly, the cost of entry into commercial property and industrial-style warehousing is lower in Mount Gambier than in major metropolitan areas. We’re seeing a generational change of investors complemented by dynamic tenants who understand the value of investing in their own tenancies.
Macroeconomics
As with any property investment, you must first do your due diligence. As commercial property value is linked directly to the local economy, this is the time to look at the overall regional economics and any potential risks.
How strong is the economy? Are there quality work opportunities in the region? What is the residential housing market doing? How likely is it that businesses or government organisations will expand, needing more commercial space? What is the state of the tourism market? Note that Mount Gambier, interconnected between Melbourne and Adelaide, is ideally placed for organisations – especially health services, education, retail and warehousing – that need to expand and are constrained in metropolitan areas. Additionally, the University of South Australia Mount Gambier campus is host to, among other activities, a forest products innovation hub whose results will drive further economic growth in the region.
Personal circumstances
If you hold commercial real estate, right now is a great time to re-evaluate your portfolio and see if the income it generates suits your needs for the next five to ten years. In Mount Gambier, a generational change of commercial property owners has increased motivation to reinvigorate older properties, creating opportunities for long-term commercial property owners to offload properties requiring improvement and to reinvest in modern spaces that require less maintenance.
Individual properties
Now you’re confident that you’re investing in the right region, it’s down to checking out individual buildings. Ask us about the tenant pool in Mount Gambier, what size commercial property is most in demand, and what opportunities exist for organisations to scale up or down according to circumstances.
If you’re considering purchasing a larger space, is it flexible enough to be divided into smaller spaces? What would that cost? Other questions to ask include: ‘Can the tenant be accessed easily?’, ‘Does the property lend itself to high-traffic retail?’ and ‘Does the building have parking attached?’
Stacking the numbers
When you’ve identified some possible acquisitions, it’s time to get into the financial details with your commercial real estate agent. This is when you look at the current yield and level of budget, the potential for increasing one or both after any renovations or reconfiguring of a space, and how finance can be achieved for the acquisition. Remember: for those investors prepared to take a risk with untenanted buildings, the cost of entry is lower, and once we find tenants for those buildings, you will reap the rewards.
Commercial lease overview
Leases for commercial properties work differently from those of residential properties. Generally, commercial leases are long term with options to extend. Unlike residential leases, commercial leases are difficult to exit. Commercial leases generally include what is known as a ‘make-good’ clause. A new commercial lease should be a blank canvas that tenants modify to suit their particular needs. However, at the end of their lease, tenants may be required to return the property to the agent or owner in its original (or better) condition, with all fixtures and fittings removed. Also, in a commercial real estate lease, annual rent increases are a standard condition built into the lease conditions.
Can we help with your Mount Gambier commercial property?
As Mount Gambier’s only dedicated commercial real estate agency, we have a dedicated team of resources to advise you on your commercial property needs, whether it’s an acquisition or you’re looking for a buyer for your current property. Call us on 08 87 250 500. We’re here to help.
