Why Invest in Commercial Property?

The right type of property can be a good investment opportunity, whether it be residential or commercial.  Commercial property generally offers more financial reward than residential property but there can also be more risks.

Residential property is looking less attractive for some investors, in part because of the additional properties Stamp Duty Land Tax surcharge introduced last year.  This does not affect commercial properties.

Yields for commercial properties are generally higher.  A residential property has a lower yield but the owner can usually factor in a certain amount of growth.  Commercial property price increases are less certain but the income reward is much greater.

A commercial tenant will usually enter longer leases creating more certainty and a more reliable income stream.  A commercial tenant is often also expected to take on many of the responsibilities for maintenance and repair that a residential landlord would deal with – no calls if the boiler breaks; the tenant would simply have to reorganise the repair or replacement.

Commercial tenants usually have defined hours of operation, meaning no calls to their landlord at 1am because they have lost their key! A business to business transaction is usually more professional and less emotionally draining.

When looking at acquiring a commercial property, it is important to carry out the appropriate due diligence, not just into the building but also the occupiers.  If it is a business that is open to the public, then visit and see how well they perform.  Look at their competition, how do they come across? Do their opening hours compare favourably? How busy were they?

A bigger investment is often needed for commercial property.  It can also be harder to arrange mortgage finance.  Typically interest only mortgages are rare.  The lack of certainty for growth means that lenders tend to lend only on a capital repayment basis.

Commercial property remains a useful addition to a diverse investment portfolio.

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Tamzin Mandelli

Associate, Commercial Property

Prior to joining Hart Brown, Tamzin had worked for a local authority, for both regional and national firms, and she had managed her own firm....

Associate, Commercial Property

Tamzin Mandelli

Prior to joining Hart Brown, Tamzin had worked for a local authority, for both regional and national firms, and she had managed her own firm.

Tamzin specialises in all aspects of commercial property including the sale and purchase of shops, offices and restaurants, landlord and tenant matters (from granting the new lease, through to the various licences for works, transfers and so on) and dealing with the eventual termination of a lease. She is also experienced at dealing with development work including option agreements and acquisitions.

Her most memorable case was the lease of some advertising space – for a well known electronics company in Leicester Square!