Perth Commercial Property Trends 2024
The Perth commercial property market heads into 2024 on strong footing, with resilient demand across retail, office, and industrial sectors over the past year despite wider economic pressures. Experts forecast the commercial real estate rebound to continue gaining steam over the next two years as inflation declines and interest rates stabilise.
However, as the city’s population expands rapidly, a widening imbalance is also growing between retail property supply and demand, handing significant bargaining power to landlords in lease negotiations.
Just 43,000 square meters of new retail space is slated for delivery through 2026 – less than half the 10-year average. With Perth’s population projected to grow 13% over the next decade, the supply-demand imbalance will likely worsen. Many businesses have already witnessed firsthand the impact over the last year, slammed with rental rate increases of 7% versus the usual 2-3%.
If you’re a Perth business owner currently leasing retail or office premises, 2024 may present the ideal moment to transition from renting to owning your commercial space.
As one of Perth’s most established commercial finance brokers, we’re here to help guide you through the key considerations for buying commercial real estate in 2024.
Let’s dive in.
Why Buy Commercial Property in Perth in 2024
After dropping in 2022 and 2023, commercial property prices are expected to stabilise across retail, office and industrial assets in 2024. This presents an opportune window for Perth businesses to secure their own premises. Here are just some of the benefits leading the case for Perth business owners to make the move to commercial property ownership in 2024.
1. Financial Security
A shortage of commercial property has already enabled landlords to push rents far higher than they were a year ago. Many retailers faced escalating rental rates in their last review, with increases of 7% now common versus the historical average of 2-3%. Investors and institutions also dominate shopping centre ownership in the state at 63%, leaving business owners vulnerable when lease terms expire.
Owning commercial property can provide businesses with consistency, sustainability, and protection from unpredictable leasing expenses. The consensus from the big four banks is that interest rates are likely to remain stable in Australia for the majority of 2024, with potential cuts coming towards the end of the year. However, even with an increase in variable mortgage rates, financing expenses can be managed by fixing terms to deliver predictable budgeting.
While the upfront capital required to purchase commercial property can feel unsurmountable, there are many commercial finance options available to Perth businesses. As your local commercial finance brokers in Perth, Southshore Finance are here to help you secure the finance you need to meet your goals.
2. Flexibility and Customisation
Purchasing commercial property hands control back to Perth business owners. Rather than requiring landlord approval for renovations, reconfigurations, or improvements, owners have the flexibility to customise their property to best suit their trade. Whether upgrading fixtures, redoing floor plans to improve customer flow, installing new technologies, or making cosmetic enhancements – owners can make strategic changes to advance their business goals and brand.
3. Equity and Appreciation
Owning the property builds equity over time as the asset appreciates, unlike leasing where payments cover someone else’s mortgage interest. While tenants only enjoy use of the space, owners gain an appreciating real estate investment. Well-located Perth commercial properties have historically increased in valuation over longer holding periods. By securing ownership during the current cycle, business owners put themselves in a position to realise financial advantages as the Perth property market strengthens in the coming years.
For Perth businesses tired of unpredictable leases and runaway rents, 2024 may offer the right timing to transition from tenant to owner. Between appreciation and equity build, commercial real estate can also provide other financial advantages over merely paying someone else’s mortgage.
Consult an expert commercial finance broker to assess if purchasing property aligns to your operations and goals.
4. Tax Benefits
An additional advantage of commercial property ownership is the ability to deduct related expenses from your taxes.
Costs like property taxes, maintenance, repairs, mortgage interest and insurance can offset business revenue when filing.
These deductions make ownership more affordable and reduce total operating costs. Whether itemizing reductions directly or depreciating the property value over time, the tax benefits provide significant savings versus leasing.
Consult your accountant to maximise write-offs if considering buying commercial real estate.
Tips For Financing a Commercial Property Purchase
When looking to purchase commercial real estate, securing financing should be a top priority. Here are some tips to guide you through the process:
Explore Loan Types
There are various loan types to consider rather than standard mortgages, such as commercial loans or business lines of credit. These are tailored to commercial assets and business financials. A commercial finance broker can explain options to match your requirements, budgets and risk tolerance.
Prepare Documentation
Come prepared by having your financial statements, tax returns, business plan projections and other documents organized. Lenders scrutinize current finances and future outlook to assess risk and repayment ability. Solid documentation builds your case.
Look Into Incentives
Research government initiatives, grants, or small business programs through bodies like the WA State Government that promote commercial property ownership. Your commercial finance broker can help you investigate incentives you may qualify for.
Work with an Experienced Commercial Finance Broker
Tap into expert knowledge on current financing options, terms, and best deals with lenders. At Southshore Finance, we work for you, not the banks, meaning we have your best interest in mind when negotiating favourable conditions. Our top priority is to make sure you get the right finance on the right terms.
Contact Southshore Finance
Now may be the best time to seize control of commercial property for greater business stability. Ready to explore the Perth commercial property market?
Let us help you.
The search for financing process can be complicated, but as Perth’s trusted commercial finance brokers, Southshore Finance can guide you through every aspect. Contact us today for a free no-obligations discussion about your circumstances.