So, You Want to Buy Commercial Property? Start With This Checklist
Investing in commercial property can be a smart move, offering steady rental yields, longer lease terms, and opportunities for capital growth. But unlike buying a residential home, a commercial acquisition comes with more complexity, higher stakes, and greater need for due diligence.
If you’re ready to buy commercial property, this checklist will help you make informed decisions and avoid costly missteps.
Whether you’re a first-time investor or adding to your portfolio, here’s what to consider before signing a contract.
Understand Your Investment Strategy
Before diving into the listings, define your goals. Are you:
- Looking for a passive income stream?
- Planning to occupy the property for your own business?
- Hoping to landbank or develop the site in future?
Your strategy will shape the type of property you pursue, whether it’s a retail shopfront, warehouse, office space or mixed-use development.
Choose the Right Asset Type
Commercial real estate covers a range of asset classes, each with unique risks and returns. Here’s a quick comparison:
- Retail: Can deliver high foot traffic but is sensitive to consumer trends and online shopping habits.
- Industrial: Strong demand post-COVID, especially for logistics and last-mile warehousing.
- Office: Often offers longer leases but may face shifts in tenant demand due to hybrid working.
- Mixed-Use or Development Sites: Potential for long-term capital growth but may require more planning and vision.
Research which sector suits your risk profile and investment horizon when buying commercial real estate.
Zoning, Planning, and Permitted Use
Every commercial property is governed by planning rules. Before you buy commercial property, check:
- Local zoning regulations
- Permitted uses (especially if you’re planning to redevelop or occupy)
- Overlay restrictions or heritage controls
- Whether the site aligns with your intended use
Getting it wrong could result in major delays or an unusable investment. To learn more visit this article on real estate zones.
Lease Review (If Tenanted)
For tenanted investments, the lease is the value. Examine:
- Lease term and expiry date
- Rent reviews (fixed, CPI or market-based)
- Options to renew
- Tenant covenant (how secure and reputable they are)
- Who pays for outgoings?
Strong leases with reliable tenants often attract lower risk and higher interest from lenders.
Financial Analysis: Beyond the Purchase Price
Too often, first-time buyers focus on the headline price rather than long-term performance. Assess:
- Net rental income (after outgoings)
- Capitalisation rate (cap rate)
- Return on investment (ROI)
- Potential for rental uplift
- Depreciation benefits and tax deductions
Work closely with your accountant to crunch the numbers—and don’t underestimate ongoing costs like repairs, insurance, land tax, or management fees.
Building Condition and Compliance
Before settlement, ensure your commercial property is:
- Structurally sound
- Up to code for essential safety measures (ESM)
- Free of hazardous materials (like asbestos)
- Covered by proper insurance
- Clear of zoning non-compliance or building notices
A professional building inspection and legal review can help uncover hidden issues.
Location, Demand and Infrastructure
When you buy commercial property, think like a tenant. Ask:
- Is it close to main roads or transport routes?
- Is there sufficient parking, signage, or access?
- What’s the local competition like?
- Are vacancy rates high in the area?
- Are new developments planned nearby?
Even a high-yielding property can struggle if it’s in the wrong location. Learn more about key infrastructure in Melbourne and how this might impact your search.
Surround Yourself With the Right Experts
Buying commercial real estate isn’t a solo sport. The right team can save you time, money, and risk. That may include:
- A commercial buyers agent to identify quality assets (including off-market deals)
- A lawyer experienced in commercial property
- An accountant to model tax and cash flow outcomes
- A commercial property manager or asset manager for ongoing optimisation
Expert advice pays off in the long run, especially for high-value purchases.
Ready to Buy Commercial Property?
If you’re ready to invest, don’t just browse aimlessly. Know what you’re looking for, check every detail, and think beyond the sale price.
At CPN Commercial Group, we guide investors through every stage of the acquisition process. From due diligence to leasing and strategy, our team ensures your investment is set up to perform.
Explore our current commercial property for sale Melbourne or contact us for tailored guidance on your next move.
