Developing properties can be a very lucrative endeavour, if you choose the correct venue. Office space is ideal for development because it’s often already set up for use by commercial lease. Location, the state of the space being considered, the local market and economy, and demand for the space are all important considerations before committing to a particular investment. Typically, high-density commercial areas are the best places for development. For example, offering offices to let oxford makes more sense than developing office space in a less-commercial or more rural district.
Location is a key factor when deciding on property investment of any kind, but it is not the only consideration. The availability of rental space in the area, the market, and the level of demand are also important considerations. When prime office space is plentiful, turning a developed space into a lucrative investment might be more difficult than in an area that has fewer available commercial spaces available. Prime and less desirable office spaces must, of course, be considered separately, as they do not appeal to the same type of potential tenants. In an area where high-end companies let most of the offices, developing sub-standard properties for lower-cost offerings might be problematic.
Costs of development
When considering developing office space for letting, there are, of course, other factors to take into account. Cost is always the important consideration. Will the cost of planning permissions, renovations and other overheads be made up in healthy profits? Some aesthetics are easy to improve - by adding a fresh coat of paint to tired walls, for example, but other upgrades may be much more costly. Balancing cost and profit is often a tricky manoeuvre, but it is essential to get this right if you are to be successful in property development. Looking at a property through the eyes of a prospective tenant is important. Will the signage be visible enough to draw in their clientele? Will local planners allow for the type of businesses that would be interested in the space? Understanding the market and the potential tenant’s needs are key to investing in a successful development.
The current rental market
Finally, the current market is a consideration in whether or not to develop a property. During lean times, when jobs are scarce and companies are downsizing, developing new properties will take great marketing skill. It may be necessary to sell potential users on the idea of business expansion. Explaining that the price is now low because of a depressed market, but renting a larger space than necessary for their immediate need in order to accommodate future growth, can be a strong selling point. Everyone likes to feel as if they have made a sound buying decision; so emphasizing the “low” rates due to a depressed economy can actually result in stronger rentals, even in a weak economy.
Developing office space can be one of the less-risky investments made, as long as there is a complete understanding of all the factors to consider. Location, the cost of the development, the needs of potential tenants, and a firm understanding of the current market, as well as a strong sense of salesmanship, are all important in deciding whether to develop office space property.