Choosing an Office Building

Of three main types of commercial property, offices offer the lowest yield. Over the past 30 years, offices have averaged a 7 percent return but currently are returning 6 percent according to Jones Lang LaSalle, AMP Capital Investors.

One of the reason office property offers a relatively low yield is that it is seen as a safer investment than retail or industrial. Office tenants tend to stay in their premises longer generally than owners of a retail business, therefore offering greater security to investors.

If you are considering purchasing office property, keep the following attributes in mind:

• Attractive appearance – Business like to be in aesthetically appealing buildings. This includes the external appearance as well as internal look of the building. The tenant is often responsible for the internal cosmetic appearance (office fitting out, office furnishings) but landlords need to ensure that the building appears modern.
• Aesthetic entry – As many homes strive for the WOW factor in the kitchen or yard, the entry to the office building is where you should be concentrating your efforts. This attracts tenants in the first instance and also put the clients of your tenants in a good frame of mind as soon as they walk in through the doors.
• Natural light – The workers in the office building will spend most of their working day indoors. The opportunity to look at a view and have natural light streaming into their space is of high demand.
• Proximity to other offices – Offices tend to do business with other offices. It is no coincidence that lawyers’ offices are grouped together, usually near the court precinct, and banks are grouped in the heart of the CBD. If you are looking to buy and office building, it is safer to buy one in a sought after location.