Independent rental valuations.
COMMERCIAL, INDUSTRIAL AND RETAL PROPERTIES
Market rental values of commercial, industrial and retail properties are the most under or over/inaccurately assessed sector of the real estate market than any other area, which translates into leases and financial gain or loss for the landlord or the tenant.
This is mainly due long-term use and reliance by people on previously steady yields and cap rates on such properties estimating rents from sale prices or considered market value in favour of comparable properties where they are absent.
In recent years these rates have been more volatile and have fluctuated greatly leading to vastly inaccurate rental assessments on this basis.
Rent valuation example.
In times gone by, a rate of say 7% may have been a stalwart/solid and constant with minor adjustments here and there, however with for example significant compression in such rates of 3% in cases, can create vastly inaccurate outcomes.
For example: A property sold for $1,000,000 and @ 7% may indicate a market rental of $70,000pa.
Yet, a similar property recently sold and recently leased @ 6% being an actual $60,000pa reflection. The seemingly small 1% differential translates to an almost 17% inflated rental all things being equal.
Furthermore leases often with fixed-rate rises per annum or CPI rate rises being out of line with a changing market can be massively skewed over a 3, 5 and without a doubt a 7 or 10 year lease terms.
Often items such very expensive fit-outs and other benefits may be hidden into inflated rents and leases for various reasons, which cause a purchaser to buy above market value, go to release the property and find the rental was inflated and suffer a double loss similar with tenants not knowing past leases have been inflated and walk into inflated leases based on the past at face value.
The importance of obtaining an independent rental assessment
It is for this reason, it is always beneficial for a landlord or tenant to have an independent rental assessment conducted in the lead up to the termination date or option period to place them in an enlightened position prior to the crucial renewal period.
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Our licensed property valuers provide completely independent real estate valuations and assessments for all situations and property types including residential, commercial, industrial, retail, accommodation, healthcare, and childcare. We offer easy-to-read and interpret valuation and assessment formats tailored to the client’s individual needs. Our Sydney valuers are members of the Australian Property Institute (API valuers) and are bound by a strict code of ethics. We service all Sydney suburbs and throughout NSW.