Over the weekend I went to see a shop and uppers in a location that is considered set to rise. The journey took about an hour, but one has to follow the money. Being nearby is not on the criteria for a good investment.
The shop used to be a dry cleaner. Spookily, we have recently bought a shop and uppers for a client where the commercial was a dry cleaner, and the property I saw after that purchase was also a dry cleaner!
This block is very interesting, and is only 5 minutes’ walk from the station. There is access to the flats from a side entrance, which is an important point to bear in mind when looking at these types of properties.
The aim would be to convert the empty commercial into residential under permitted development, the rear access fits in nicely with this plan. We would leave a small commercial space to the front, this is the most valuable portion of a street facing commercial unit; Zone A they call it, which is defined as the first 20 ft depth into the property. The prices half in the next section and so on as one goes deeper into the unit. The other interesting point to note is when the rateable value is below £12,000 the premises does not attract any business rates whatsoever. It’s a wonder how businesses survive between paying just their rent and business rates even during the best of times.
This premises will tick all these boxes and therefore be attractive to a business such as a hairdresser, nail saloon, coffee shop etc. I would envisage a non retail, service orientated tenant taking this unit up.
There is a large lump of poor quality accommodation upstairs, which needs a sprucing up. The property consists of 2,500 sq. ft., half commercial and the other half residential. Stage 1 would be to convert the majority of the commercial into residential under permitted development. Thereafter to pull the building upwards to get another floor, everyone else seems to have done it so why not us. And then also to extend backwards. The latter two will need to be done under planning, though this does not look contentious, as neighbouring buildings have done the same.
The price for this property is circa £725K; cheap for a freehold commercial building. We explored the building next door with a view of acquiring it. It’s a single story unit, which looks like it unsurprisingly hasn’t been occupied for a while. A little research revealed the property was bought for £250K in 2017 and the lender used for the purchase looks like an expensive commercial lender. It can almost certainly be assumed the rent is not currently being paid, and therefore perhaps the owner is struggling to the pay the mortgage. Buying next door would help to tidy up the development, but it’s not essential, just ‘a nice to have’.
We have started the process to approach the owner with a view of making an offer. Meanwhile, we will match this property with a client who is ready to purchase.