Building a Tenant Property: What You Need to Know
Building a commercial Investment property can be a great business opportunity for anyone looking to generate long-term rental income. You have a few factors to consider if you’re planning such an investment. Your first decision is whether to build a single or multi-tenant property. Both options offer unique advantages. Read on to discover which is right for you.
What is a Multi-Tenant Property?
Multi-tenant buildings accommodate multiple tenants or businesses. These versatile buildings benefit property owners and tenants alike. Common examples include:
- Commercial office properties housing different businesses
- Hotels or apartment complexes with multiple units
- Shopping centres with various restaurants, retail stores, or local businesses
- A shared office space, storage building, or workshop
Key Benefits of Multi-Tenant Properties
Reduces the Risk of Vacancy
Simon Archer, Coresteel’s Commercial Manager, believes a significant advantage of multi-tenant buildings is their reduced vacancy risk.
“When you have multiple tenants, you reduce the risk of the whole building becoming vacant because the chances of everybody vacating at once are slim. Whereas, if you’ve got one tenant, that’s a higher risk.”
Diversified Income
Investing in a multi-tenant property is a great way to diversify your income. Multi-tenant properties generate multiple sources of income from different tenants, leading to a potentially higher return on investment. Additionally, if a single tenant leaves the property, other tenants will still be paying rent, resulting in less risk of income loss for the owner.
What is a Single-Tenant Property?
A single-tenant property houses a single tenant or business. Common examples include:
- A stand-alone retail store
- An office building or workshop housing a single business
- A single restaurant or food outlet
- A manufacturing facility that produces goods for one company
- Warehouses that store inventory or goods for a single business or company
Key Benefits of Single-Tenant Properties
Financial Stability
Unlike multi-tenant buildings, single-tenant properties only have one source of income. But that’s not necessarily a bad thing. Relying on one tenant for income can provide more stability and certainty for the property owner, as the owner won’t have to deal with the risk of multiple late payments from various tenants.
Easy Management & Maintenance
Managing tenant relations is much easier with a single tenant, as you only have to deal with one person’s needs and demands. Building maintenance is also more straightforward, which can help reduce overall costs.
Single vs Multi-Tenant Properties: Key Considerations
Choosing to build a single-tenant or multi-tenant property will depend on various factors. Simon Archer says that both options are great investments, and one is no better than the other. At Coresteel, we specialise in both property types and can deliver customised solutions for your business needs. Consider the following factors before making your decision.
Business Goals, Needs, & Budget
What are your goals for commercial investment property, and how much space will you require? Multi-tenant properties can require more specialised design requirements, so they may be more expensive to build per square metre. Consider your budget carefully before committing to the project.
Location
Location is paramount when deciding to build a single or multi-tenant property. If you want to attract multiple tenants, building your property in an accessible area close to transport will be crucial. A convenient location will also make it easier for clients, customers, or visitors to visit the building.
Market Demand
With any commercial building project, it is essential to consider the market demand. Is there a demand for multi-tenant properties in your region? What’s the competition in the area? These factors will affect the success of your property and your ability to make a profit.
Build Your Commercial Investment Property with Coresteel Today!
Ready to build your single or multi-tenant property? Coresteel Buildings can bring your vision to life, whether you’re creating a stand-alone retail store or a commercial office building. Talk to us today about your requirements!