As we welcomed 2022, many of us are excited to return to our plush offices and daily cups of coffee accompanied by a side of water cooler gossip.
However, unfortunately thanks to COVID, we have been dealt yet another blow to ‘office life’ as we know it, with high case numbers forcing many of us back to work-from-home routines for the foreseeable future.
If you’ve spent the last two years back and forth between the office and home, you might start wondering whether you even need a physical office at all.
Offices located in CBD areas often have higher repayments, significant maintenance costs and if the space is tenanted, it’s very likely that you’ve been asked to reduce rent several times over the past few years.
So, if you’re ready to throw in the towel, sell up, and move your business to a complete work-from-home operation, there are few things you should consider first!
Don’t sell if you don’t have to
I know that with COVID-19 putting hardships on many businesses, it can seem like your only option is to sell your main asset – your office space.
However, if you don’t have to sell your space to get by, I recommend you don’t. You never want to sell in a buyers market and that is what the office space market is in right now.
You want to be more versatile with your space and sell in a sellers market where you can demand higher prices. If you are struggling with your repayments then work out your bottom line and find either an anchor tenant or multi – tenants to rent out your space.
If you can find a strong anchor tenant then you are in luck – failing that suggests the best way is to split the office up to multiple smaller spaces.
Where once big offices were in, now small office spaces for 1 – 4 people are easier to tenant – this is because many people still prefer a base while they can work from home.
Many companies also allow their staff to work from home but they need to go to the office once or twice a year. Work out your bottom line for breaking even and let sub tenants help you make your mortgage repayments.
Speak to your office neighbours
If you work in a communal office building with lots of individual offices, go and speak to your neighbours if you’re thinking of selling. Get their insights around what they are likely to do in the current COVID environment and if they are looking to sell, you have the opportunity to band together and increase value for potential buyers.
If they don’t want to sell, they may be open to purchasing your space, which means you can keep transactions easy, knowing that your property is going to good hands.
Look to overseas investors
If you do decide that you want to sell your office space, it is recommended that you do your due diligence and don’t just sell it to the first person interested.
I know it can seem very tempting to do this in an uncertain COVID market.
However, it’s actually in your best interest to take your time and look for investors that genuinely see the value of your property and are willing to pay top dollar for your asset, particularly if your office is in a high foot traffic area or Central Business District.
A great option is to look to overseas investors, particularly from Asian Markets, potentially seeking a great new real estate opportunity in Australia.
Investing in property during a pandemic can be tricky, however investors with large property portfolios and revenue streams are the best way to go.
They are looking at the potential your property will have in the next 10-20 years, so they are more likely to spend big on your office and make you a strong offer.
Invest in renovations
Moving out of an office space can feel very overwhelming and take a lot of preparation. So much so, that doing anything additional to your space including deep cleans, repairs and renovations, can make it all the more daunting.
However, when it comes to getting the most bang for your buck on your commercial office space, investing in renovations is a key way you can increase its value.
Whether that is through re-laying some carpets, painting the walls, investing in more storage space or even re-doing kitchens and bathrooms, these cost effective renovations will allow you to increase the price of your listing and add value for the new buyer.
Everyone likes a clean slate to work from so a potential buyer who is owner occupier can see what they can do with the space once you have brought it back to a clean shell.
Sell off a portion
If unsure whether you might need your space again, but don’t have the means to keep paying the mortgage off, you can also look to sell off a portion of your property.
Depending on your agreements, you may be able to sell a small portion of your space and downsize your offices so that you can hold onto some space, whilst getting rid of excess.
When it comes to something like this, it is recommended you involve a solicitor to ensure you stay above board and don’t get into any legal/building issues.
This may require you to strata a property to do it or to sell off one of the lots you have if you own your office over two lots in a strata scheme.
Regardless of whether you want to sell or stay in the office in 2022, always do your research and speak to a qualified commercial property specialist or agent about the value of your office space and what is right for your needs.
Helen Tarrant is Australia’s number one commercial property specialist and Founder of leading Buyer’s Agency, Unikorn Commercial Property.