Selling commercial property Perth owners tend to treat as a marketing exercise. It is mostly a preparation exercise. The campaign decides how many buyers look at it. The preparation decides what they are willing to pay and how quickly a contract goes unconditional, and the second of those is worth more than the first.
Three things move the price
Income certainty. Not the rent, the certainty of it. A tenant with a solid trading history, a guarantee behind them and a clean payment record is worth more per dollar of rent than a tenant nobody can assess.
The expiry profile. A building where every lease falls due in the same eighteen months prices differently from one where they are staggered, even at the same rent, because the buyer is pricing the risk of being empty.
Condition and compliance. Not how the building looks. Whether the fire systems are certified, the essential services have been maintained and the records exist to show it. A buyer who finds a gap here prices it at worst case, and worst case is always dearer than the actual cost of fixing it.
Everything else is negotiation.
Start three months out
This is the part owners skip, and it is the part that pays.
Read the leases. Not the summary, the leases, including every variation and side letter. Owners are regularly surprised by an option that was exercised informally, a rent review that was never actioned, or an incentive that is still being amortised.
Reconcile the outgoings. If last year’s reconciliation is outstanding, finish it. An unreconciled recovery is a question mark in due diligence and it will be priced as a liability.
Fix the small compliance items. Fire certification, any outstanding statutory notices, service agreements that have lapsed. These are cheap now and expensive under a contract.
Settle the GST position with your accountant. Whether the sale can be treated as a going concern affects how the contract is drawn, and it is far better decided before a contract exists than renegotiated after one does.
The file a buyer will ask for
Assemble it before the first inspection, not after an offer.
Leases and all variations. A tenancy schedule showing rent, review dates, expiries, options and guarantees. Outgoings budgets and the last two reconciliations. Building and fire compliance records. Strata documents where the property is strata titled, including the levies and any special levy on foot. Zoning, approvals and any conditions attached to them. Current service contracts. A record of capital expenditure over recent years.
A buyer who can see all of that in the first week negotiates on price. One who is drip fed it over a month negotiates on risk, and that is a worse conversation for the seller.
Vacant or leased?
Same question as a residential sale, different answer.
An investor is buying the income, so a lease with term left on it and a decent covenant is an asset. An owner occupier is buying the premises, and a lease with three years to run makes the property unbuyable for them.
Which group pays more depends on the property. Small strata offices, showrooms and warehouses in Perth frequently sell best to owner occupiers, and that can mean it is worth timing the sale to a lease expiry rather than renewing a tenant on autopilot twelve months out.
That decision has to be made before the lease is renewed, which is why it belongs in a conversation a year ahead of the sale rather than a month before the campaign.
What not to do
Do not renew a lease on short terms to make the property look tenanted. A buyer reads a twelve month renewal as a tenant who is leaving.
Do not present an outgoings figure that has not been reconciled. It will be checked.
And do not launch while something material is unresolved. A campaign paused to sort out a compliance issue is a campaign that has already told the market something.
The short version
Read the leases, reconcile the outgoings, close out compliance, settle the GST treatment, and have the file complete before the first inspection. Decide whether you are selling income or premises, and decide it before the next lease renewal rather than after it.
If you are thinking about selling in the next year, the useful conversation is now rather than at the point you want it listed. Our commercial property sales team looks at the leases, the expiry profile and the likely buyer together and will tell you plainly if the property is worth more twelve months from now than it is today.
This article is general information and not advice, and the GST treatment of any sale is a matter for your accountant.
