Business Premises Acquisition
Buying your own premises is two decisions taken at once. Operationally, it fixes occupancy cost, removes relocation risk and lets you configure the site around how the business actually works. Financially, it converts a pure expense into an asset held on the owner's balance sheet or inside their superannuation fund.
The failure mode is treating it as only one of those decisions. A building that suits the business perfectly but has no alternative tenant is a poor asset; a well-priced asset that constrains operations is a poor premises. Both tests must be passed.
Buy versus lease, modelled properly
We model both paths over a ten-year horizon: total lease cost including escalations, incentives, make-good and relocation risk, against total ownership cost including deposit, loan servicing, non-recoverable outgoings, capital works and the equity position at year ten.
The comparison is rarely close once capital growth and rent escalation are included, but it depends entirely on the price paid and the stability of the business. Volatile or early-stage businesses are often better served by leasing and retaining capital in the operation.
Operational requirements come first
The premises must serve the business as it will be in five years, not as it is today. Floor area and expansion capacity, clearance and loading for goods movement, power and services, staff parking and amenity, customer access and visibility, and proximity to the labour pool and to key customers.
Getting this wrong is expensive in a way that a purely financial analysis will not show, because relocating an operating business carries costs that never appear in a feasibility.
Underwrite it as an investment anyway
We assess every owner-occupier acquisition as though the business will one day vacate, because eventually it will, through sale, growth or succession. What is the market rent, how deep is the tenant pool, what is the land value, and what is the resale market for the asset?
That analysis also sets the rent for a related-party lease and protects the value of the property as a separate asset in a future business sale.
Ownership structure
The property may be held by the operating entity, a separate holding entity, a family trust, an SMSF, or a unit trust where several business partners have unequal shares. Each has different tax, asset protection, succession and exit consequences.
Your accountant should determine the structure. We flag the property-side implications, particularly how the structure affects the ability to sell the business without the property, or the property without the business.
Questions investors ask us.
- How much deposit is required to buy commercial premises?
- Commercial lending typically requires a materially larger equity contribution than residential, with the exact requirement depending on the asset, the lender and whether the loan is owner-occupier or investment. Your broker or banker will confirm.
- Should I buy through my SMSF?
- It is a common and often effective structure for business real property. It is a decision for your accountant and adviser; we then acquire the asset to suit the structure.
- What if I want to sell the business later but keep the property?
- That is exactly why the property must be underwritten independently and the related-party lease documented at market rent from day one.
Request an investment strategy session.
A written brief, an independent view on the asset or the mandate, and a clear position on whether the capital should be deployed at all.