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Learn MoreSecuring your dream practice premises requires thorough consideration, plenty of research and advice from a trusted source.
Buying a commercial property can set up medical professionals for life—if they get it right.
There are a multitude of factors to consider to ensure you get a property that is fit for purpose, not only today, but is also able to deliver long-term value. According to our expert bankers, here are some things to weigh up.
Location, location, location
A commercial area that seems perfect today could lose its lustre in the future.
However, assessing the strengths of a suburb and checking out past business trends in the area can minimise any risks. Is the population on the rise? Does the site have access to public transport? Are there anchor tenants in the commercial zone or planned development within the area? “Practices located near shopping precincts with a strong anchor tenant will give the greatest exposure to foot traffic” says Nicole Balneaves, Senior Product Manager at BOQ Specialist.
She adds that buying on a site with good street frontage and the potential to erect eye-catching signage can make a real difference.
Nicole says it also often helps if practice owners have exposure to the area and its demographics prior to looking to purchase their own site. Another option for medical professionals could be to acquire property within close proximity to hospitals. A thorough review of competition or potential synergies within the area should also be part of your extensive research.
The state of the economy
Before signing on the dotted line for a commercial property, consider how the economy is performing.
Commercial property owners are more exposed to financial ups and downs than residential owners because people always need a place to live, whereas demand for high-end service providers can wax and wane. A sudden downturn could reduce an owner’s personal income, and limit their capacity to lease additional space to other businesses. Nicole recommends speaking to financial experts to gain an understanding of current economic and market trends.
Support services and accessibility
A second-floor medical clinic without a satisfactory lift is a sure turn-off for potential patients, especially the elderly, disabled or parents with children. “A practice needs to be easily accessible and accommodating to the needs of your patient base,” Nicole says.
Other factors such as parking, security and access to IT infrastructure should also be part of the equation. Superior and well thought-out property facilities can aid your practice in the day-to-day, but also could ultimately contribute to a higher potential resale value of the site in the future as well.
Existing leases and tenants
An investor in commercial property should understand their legal obligations when it comes to taking on an existing leasing arrangement when acquiring a property. If, for example, a tenants current leasing arrangement or terms are inconsistent with market norms this may impact profitability on the property. Conversely, if the leases of high-paying tenants are about to expire, the new owner runs the risk of purchasing suites that could soon be vacant. “So it’s important to look at the tenancy demand and vacancies within an area, including the profiles of the existing tenants,” Nicole says.
Growth goals for your practice
Nicole says prospective commercial property owners should understand the growth plans for their practice before agreeing to a purchase.
“Some practitioners may currently be operating out of a one or two room practice, but their goal might be to expand in the future,” she says. “Does the property you’re looking at accommodate those growth plans?”
Failing to account for the anticipated growth could result in significant costs should a bigger site be required within a few years, particularly if your practice requires purpose-built fixtures and fittings.
Other elements to think about include:
Zoning and heritage-list guidelines – converting an existing house or property into a purpose-built medical practice could be subject to strict council planning laws.
Taxing times – the purchase of a commercial premises can attract GST, especially when buying off the plan, and that can make a significant difference to cashflow or the financial viability of the site. Also factor in costs such as stamp duty, initial set-up costs and signage. Try our stamp duty calculator to work out how much stamp duty you’ll owe with your home loan.
Contract of sale – such a contract will typically set out the terms and conditions for the sale of the property, including a description of the property, the purchase price, a list of any fixtures or fittings that are included in the sale, and the settlement date.
Doing your due diligence on a commercial property is a must, according to Nicole. That means paying attention to financial and legal considerations, having a building and pest inspection that discloses any underlying structural concerns with the property and infrastructure. It is also important to check that the property is correctly zoned for the intended use and relevant permits held if required.
This often exhaustive checklist underlines the importance of seeking advice from trusted banking, finance and legal advisers before finalising a commercial property deal.
“We have the industry knowledge and can help clients ask the right questions,” Nicole says. “This is what we do every day, and we are focussed on helping doctors, dentists and vets achieve their professional goals.”
Do you want to know more about purchasing commercial property? Click here to visit our page on commercial property loans, or call us on 1300 160 160.
