Is owning your industrial building the best use of your business capital?
Industrial – Workplace July 2017
While owning your own warehouse or other industrial property could – on paper – seem like a smart business decision, could it be at the expense of growing or evolving your business?
If you could free up the capital that you currently have invested in bricks and mortar and channel that money into business development, your business operation could go to another level.
From an investment perspective, the industrial property sector continues to outperform the other commercial sectors. Industrial property remains in high demand and short supply throughout New Zealand as investors seek out opportunities and chase good returns.
Your industrial property is likely to attract broad attention from investors and there is evidence that owner-occupiers are taking advantage of the spirited industrial property market to cash up and realise the benefits.
If you were to sell your industrial property and negotiate a lease to occupy the building with the new owner, you are likely to have significant capital to invest back into your business operation with no disruption to your day-to-day activity.
The money you get from selling the physical property could generate a much higher return over time if invested back into the business.
You could be freed up to:
• Take on new staff • Get new plant and machinery • Streamline your business with new technology • Expand your business or take it in another direction • Buy out a competitor
Getting the terms of the lease right can secure the premises long-term and allow business continuity. Having a committed and long-term tenant in place will make your property even more attractive to investors.
Being the tenant of the property can become a condition of sale and an experienced agent can assist you in the lease negotiation process. A good agent will find the best balance – getting optimal lease terms for you while maximising the value to ensure the offering is attractive for an investor.
As a tenant, you may not have the ongoing maintenance, insurance or administrative hassles that come with owning property and this in itself could free up dollars – and time.
Likewise, knowing what your lease outgoings will be over a fixed time frame can allow for better budgeting and avoids dealing within a changing mortgage lending environment.
If business growth is on your radar, switching hats from landlord to tenant could provide the boost you’re looking for.
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