When selling a commercial property, there are a number of special features to consider, e.g. tax aspects. On this page you can find out how the sale of a commercial property differs from the private sale, how you can best proceed for the sale and how a professional commercial broker can best support you.
What types of commercial real estate are there?
Would you like to sell a commercial property? The first question is what kind of property it is. There are many different types of real estate that are used commercially. What they all have in common is that the tenants do not use the premises for residential purposes, but for business purposes.
Examples of commercial properties are:
- Office properties
- Hotels
- Restaurants
- retail spaces
- storage areas
- production halls
- doctor's surgeries
Commercial property: sale free or rented?
The properties are as diverse as the commercial activities themselves. However, the following applies to all of them: the properties can either be sold freely or let.
As a rule, a higher rent per square meter can be achieved for a rented commercial property than for a residential property. Anyone wishing to sell a commercial property should therefore ensure that the property is very well let. Vacant commercial properties are difficult to sell because buyers are afraid that the property cannot be rented out or only at very low rents. Of course, a buyer could also buy the property freely and use it himself, but most companies prefer to rent real estate rather than become owners themselves.
Commercial lease agreement - basis for the sale of a commercial property!
The potential interested parties for the purchase of a commercial unit can always present the concrete commercial rental contracts in order to be able to estimate the sustainability of the rental income. In contrast to a rental agreement for residential space, the parties to a commercial rental agreement are much freer in the drafting of the contract. Contracts often run for three or five years, sometimes up to 10 years. In practice, most tenants are given an option to extend the commercial lease at the end of the contract term.
What questions arise when selling a commercial property?
If a buyer of a commercial property does not wish to use it himself, but would like to hold it as a capital investment, the following questions regularly play a central role in the purchase decision:
- What rental income can be expected in the coming years?
- How high the risk that payment defaults is will occur or that the property will be empty?
- What maintenance costs will have to be paid in the future?
- How can the purchase of the commercial property be financed?
The amount, durability and security of rental income for commercial properties depend primarily on the location of the property. A shop in a prime location is always easy to let. A shop in a less frequented side street, on the other hand, is not secure.
Of course, the condition of the property also plays a role in its let-ability. As with other properties, every future owner will consider what maintenance costs will be incurred in order to keep the property in an attractive condition for tenants.
But the financing aspect is also playing an increasingly important role today. Since the financial crisis, banks have insisted even more strongly on a high equity ratio in the purchase price financing of commercial real estate. Today, an equity ratio of 40% and more is more the standard than the exception. Background: The risk of loss of rent is generally estimated to be much higher for commercial real estate than for residential real estate.