The alternative commercial property assets becoming popular with investors

Alternative commercial property assets are becoming increasingly popular, as more investors look to secure quality, high-yield assets, according to one of the country's leading commercial property experts.

Ray White Commercial Head of Research Vanessa Rader said, in recent years, childcare centres, service stations and fast food outlets had been hotly contested, with investors “attracted to their long-term, secure income streams”. As values for those assets rapidly increased, buyers then looked at other options, including medical centres.

“In the current market, these alternatives no longer seem all that alternative as many investors continue to move up the risk curve to secure a piece of commercial property. For some it's based on affordability, while others may focus on future growth or development potential, earning them quality longer term capital appreciation,” Ms Rader said.

Here are six different asset types that have increased in popularity in recent years:

Car parks

Ms Rader said these can range from a single space through to multi-level facilities. “The longer term development potential is often a motivator for the parking sector, however, robust returns, particularly in major cities, make parking an attractive investment option, albeit often attracting high levies and taxes imposed by state or local governments recoverable by occupiers,” she said.

Churches

Church buyers are often attracted to the property’s architecture and history, according to Ms Rader. “There have been many redevelopments of churches into residential or commercial premises, with those older properties maybe having heritage considerations when seeking redevelopment approval,” she said.

Boarding houses

Ms Rader said boarding houses were an increasingly attractive investment option, due to low vacancy rates and rising rents. “A build-to-rent type asset before build-to-rent was a thing, these assets range significantly in size and quality with a number of more modern facilities being completed in recent years, removing the stigma surrounding some of these assets,” she said.

Cold storage

These assets have become larger and more sophisticated over the past 20 years, and are in strong demand by institutional and offshore buyers, according to Ms Rader. But buyer beware: “With technology improving and the various types and levels of temperature controlled facilities, these assets can quickly become outdated or be superseded, resulting in the divide between primary and secondary widening rapidly.”

Storage sheds

Since before the pandemic, small storage facilities have been popular with new investors wanting an affordable way to enter the market, according to Ms Rader. “These units were dubbed ‘man caves’ as they were considered storage facilities for ‘toys’ such as cars, boats, caravans and other non-business uses, which was an issue for some complexes as this often is in conflict with allowable use within an industrial zoning,” she said.

Caravan parks

Ms Rader said caravan parks have been a favourite amongst private investors, in part because they may have high cashflow and be situated in high-quality locations. “Many buyers, however, look to landbank these assets for possible future redevelopment opportunities while taking advantage of ongoing returns,” she added.

I can help you buy a commercial property, whether you want to invest locally or interstate. Call or email me if you’d like to discuss how to finance the purchase.