Office
Office property is a key part of the commercial real estate market, encompassing everything from small, single-story office buildings to large, multi-floor complexes or shared co-working environments. These properties are used by companies of all sizes to house their staff, provide meeting spaces and serve as operational hubs.
Recent trends in office property have seen fluctuating demand, particularly since the onset of the pandemic. Remote working surged, leading many companies to reassess their office needs. Some businesses downsized their space, while others introduced flexible work arrangements, decreasing their demand for traditional office settings. However, despite these trends, office spaces remain essential for many companies, particularly as hybrid work models become the new norm.
Subsequently, there has been a ‘flight to quality’, with demand for high-quality office space in prime locations rising, especially as businesses strive to attract employees back to the office with modern, flexible work environments.
What is the future for
office property investment?
Hybrid work models have reshaped the office property landscape, but they haven’t eliminated the need for physical office spaces. Instead, the market has seen a shift toward flexible office designs, where businesses prioritise collaboration, innovation and employee well-being. Premium locations, sustainable building designs and shared amenities are gaining popularity, as businesses focus on offering employees an experience that remote work can’t match.
Looking ahead, office properties are likely to remain an integral part of business operations, with demand driven by companies seeking adaptable, future-proof spaces that cater to new ways of working. Investors and owner-occupiers who focus on these evolving needs are well-positioned to benefit from long-term growth in the office property market.
Why buy
office property?
For businesses looking to own their premises, buying office property offers stability and control. By owning rather than leasing, companies can eliminate the risk of rent increases, customise the space to fit their exact needs and build equity over time. Ownership also provides a long-term cost advantage, as mortgage repayments can often be more cost-effective than paying commercial rent. Moreover, you can build equity in a tangible asset that could appreciate over time.
Office property investment offers a stable income stream through rental yields, especially in premium locations with strong tenant demand. Investors can benefit from long-term leases, which are common in office properties, providing a reliable and consistent cash flow. Moreover, office properties tend to appreciate over time, offering capital growth opportunities, particularly as businesses continue to return to physical office spaces.
Though office properties can be a sound addition to your portfolio, they’re not without risk. That’s because the demand for office space can vary based on economic conditions, business trends and shifts in how companies operate (e.g. the rise of hybrid work models). This can affect both rental income and property value.
To maximise your return on office property, consider making improvements that align with current trends, such as adding sustainable features, flexible workspaces or state-of-the-art technology. These enhancements can make your property more attractive to tenants or buyers, helping you secure higher rents or resale values.
Leasing to a diverse mix of tenants can also spread risk and ensure a steady income stream.
What are the key considerations when buying
office property?
Before buying, there are several critical considerations to address:
- Strata title vs. freehold ownership: Understand the implications of owning a strata-titled office space, where you’ll share responsibilities for common areas, versus a freehold office, which gives you complete control.
- Location: The right location can make or break an office property investment. Ensure the office property is in a high-demand area, close to public transport and amenities.
- Zoning: Be sure the property is appropriately zoned for office use and any potential future developments you have in mind.
- Vacancy rates: Assess the local market’s vacancy rates to gauge demand for office spaces in the area.
- Lease agreements: Review the leases already in place. Long-term, financially secure tenants are ideal for ensuring consistent rental income.
- Stamp duty: Be mindful of state-specific stamp duty rates and how they might affect your purchase.
Why buy with
Costi Cohen?
While it might be tempting to go it alone when buying office property, the complexities involved in selecting the right property, negotiating favourable terms and managing the purchase process can be overwhelming. One wrong move can have lasting financial consequences.
At Costi Cohen, we combine market insights with market-leading industry expertise to help ensure you make a sound investment decision.
At Costi Cohen, we combine market insights with market-leading industry expertise to help ensure you make a sound investment decision.
Our process begins with understanding your needs, conducting thorough research and using our network to secure properties that may not even be on the open market. We take care of the heavy lifting, from price negotiation to ensuring you understand all the terms before you sign the contract.
With Costi Cohen by your side, you gain peace of mind knowing that every angle of your purchase has been scrutinised and that we’ll help you navigate any obstacles that arise – whether you’re investing or looking for a long-term home for your business.
How to finance your
office property investment
There are a range of finance options available, including commercial loans, SMSF loans and private finance. Lenders will consider your credit history, financial standing and the location and type of property you’re purchasing. The loan amount will depend on factors such as your deposit, the property’s rental income potential and its valuation. Most lenders will require a deposit of at least 30% of the property’s purchase price for a commercial loan, but this can vary depending on your financial situation and the lender.
It’s essential to compare the loan terms offered by different lenders, looking at the interest rates, repayment terms and any additional fees. Working with a commercial finance broker can help simplify the process and ensure you get a competitive loan tailored to your needs and circumstances.
Explore some of our
Office Purchases
We would love
to hear from you
Costi Cohen — Australia’s premier commercial real estate consultants
Whether you’re a seasoned investor or new to the market, our expertise will pave the way for your success in commercial real estate. We’ve looked after more than 250 commercial properties and are prepared to help you discover your next investment opportunity.
No matter your timeline, budget or preferred location, the expert team at Costi Cohen can help you find a commercial property that aligns with your needs. We invite you to get in touch with our team for a consultation today.
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