Industrial Warehouse Turned Office Space

Hi all,

I'm looking at my options of moving my office (currently a home office at the parents) into a commercial space probably around 6-12 months time.

The idea of buying an industrial warehouse say in Burleigh Heads, Molendinar or Nerang has crossed my mind.

I like the idea because of the cheaper entry point and low body corp compared with property in actual office buildings.

However in looking around on the market there is plenty of stock to choose from and most sellers aren't making much if any in capital gains. This is a concern because it obviously means a quick exit would likely mean a fire sale price. But at the same time, I could potentially get into something with a nice discount.

Here are what I think to be the Pros & Cons of this idea.

Pros:

- Low barrier to entry.
- Can use an existing office and have partitions/walls fitted at a later stage as and when my business grows and putting on more staff becomes a requirement.
- Low body corp.

Cons:

- Minimal capital growth.
- Due to the location and surroundings, subletting to other office space users would be unlikely.
- Excessive noise from the surrounding business'
- Could be stuck with an asset I can't sell.
- Fitout costs would be higher due to essentially starting with a blank canvas.
- There is always the possibility of deterring clients when they see an accountant working out of industrial space.

Is there anything I've missed here?

The only con that really concerns me is the parking of money/equity in an asset that hasn't typically seen much growth.

I've seen plenty of professional service businesses around the Gold Coast use this approach and they don't seem to be going out of business.

Also to answer my 'Why' do I want to leave the home office. I will need to employ staff in the near future and can't do that here. Also having a boardroom will save me time & costs of travelling to see clients.

I'd really appreciate your comments and thoughts as I'm sure many of you have far more experience than I have in the commercial property space.

Many thanks,

Andrew

 

Does the zoning allow you to live in the property?

You may find that it's a prohibited use as the property doesn't meet the requirements of a dwelling.

 

Sorry I should have clarified. I don't live in the same property as my current office.
As such I don't intend to live in the CIP.

 

You have listed all the cons for not beginning your business in an industrial area, they are all valid and I would look for other premises more suitable for your business.

 

My accountant works out of an industrial unit. It's a strange complex because it also has restaurants in there and a few other professionals like solicitors. It's not really a rough and tumble industrial estate if that makes any sense, regardless it is still zoned industrial but also partially commercial so the restaurants are ok but the professionals not. Recently the council cracked down on them and is trying to get them all shut down and move...

Be careful, zoning is one of those things that is never a problem until it's a problem. Council will periodically do a drive around to see what is happening in industrial zones because they know there is a lot dodgy stuff going on. Other times competitors will dob you in because you're gaining an unfair advantage by not paying the correct rent for the correct zones. Bulky goods are a good example, they pretty much look industrial but the rent is double that of industrial zoning. Same with office space compared to industrial. Check your councils zoning regulations carefully.

 

Car parking - an office use in most council areas requires a much greater carparking ratio.

Is the office ancillary to the industrial use? - Industrial areas usually require that the office use is ancillary to the industrial space, so must be smaller than the industrial bit.

 

You are right to look for new digs, but why rush to buy straight up ?

I think it’s great to locate amongst the working class – gives an air of authenticity – but don’t be too proud not to rent there for a while first, or even sub-lease. And like Biz says near the greasy spoon is fine, but maybe not amongst the panel beaters etc is my take. My solicitor works out of an affordable tilt-slab in Geebung, but it’s still ‘officy’ enough to drag me round the corner for a proper coffee, plus plenty of client parking. Works well. Good luck.

 

Sounds like you may need to get it approved first with a DA or similar.
I had one very very similar recently and the best guy (and most reasonably priced) for the job i found was;
Andrew Neil
T +61 2 4324 8554
[email protected]
Director – Planning and Heritage
If you give him a call or email he would be happy yo help I'm sure .

 

Thanks all for the tips and suggestions.

My thought process of buying rather than leasing was mainly to save on costs.

I liked the idea of a tilt panel unit for the potential of adding a second level down the track.

Can anyone recommend a town planner that is familiar with GCCC?

I notice Andrew Neil is based in NSW.

 

@RPI Doea a touch of town planning.

 

GCCC is very friendly for office use in industrial. You can do without a DA as long as it is ancillary to the industrial use. So if you buy a 500m2 shed then you could convert 249m2 to office use with just a Private Building Certifier (Robert at Bonafide Building Approvals is great).