Why the greatest successes in commercial property happen to those who hold on, when others let go

Everyone knows a commercial property success story. What many of us overlook, is that by far the greatest number of those stories have to do with investors who have owned their properties for many years!

When you first purchase a commercial property you should expect the returns to be between 8 – 10% – compare that to other investment options. Although some lucky investors get a ‘windfall’ when something unusual happens, (eg. the national property market skyrockets for some reason), the most reliable influences on commercial property values will always be things like rent increases, physically improving the building, negotiating longer leases, and finding better tenants.

All of these take time, management skill and knowledge – all things Guideline is renowned for.

Commercial property returns tend to get better continually over a longer period

Again, this is because in the first years rents may not rise dramatically, or if they do, they may be offset by the cost of improvements needed to bring about those rent increases. Over time most investors recover those improvement costs through rental returns, renewed leases, or negotiating with better tenants, and the value of the property begins to increase more steadily. Once all those key influences are in place, successful commercial property owners see the returns they planned for and stand out as being highly successful because most others have sold years before, when those returns were not yet possible.