Advice and Opinion

People who have done well in developing residential property should be careful when they try and do the same in the commercial space

People who have done well developing and investing in the residential market should be wary when trying to emulate this in the office or industrial sector as a different set of tactics are generally required to make commercial buildings work, said Org Geldenhuys, managing director of property and development company, Abacus DIVISIONS.

“Perhaps one of the key errors people make when trying to make the transition into the commercial property sector is to use an inexperienced professional team. One example would be that some developers typically use the same architect they used while investing, and building, in the residential market – or even use the same architect they used to build their own home. Sometimes the architect is a friend or an acquaintance and they feel obliged to use the person. But the problem with this situation,” said Geldenhuys, “is that the architect ends up designing an office building that is not suitable for being an office– as the fundamental design is more residential than commercial.

“We have seen this on a number of developments that we market and this is costing owners in the long run.”

Not only does the building fail to comply with the required aesthetics, design errors are made when it comes to other considerations, such as parking, vehicle or truck circulation space and placement of boardrooms, bathrooms and kitchens.

“We have seen a number of offices with all the internal walls built with bricks as opposed to using the industry norm of drywalls, which makes it very inflexible and not future proof at all.”

Additionally, warehouses are designed without space to load and unload containers – or no allowance is made to drive an interlink or even an 8 ton truck around a building. These are all items that are critical to the operation of industrial buildings -and affect the ability to attract tenants in the long run.

When it comes to office developments, there is often not enough parking provided on site, reception areas are confined, and several companies share one kitchen and bathroom areas.

Small things can make huge differences to attract and keep tenants, said Geldenhuys. “If there is only one kitchen, at some point there is probably going to be conflict as sugar and other items keep going missing, or are used by the wrong people. This includes items going missing from the fridge. All of this leads to stress and unhappiness for tenants.

Potential tenants are acutely aware of these issues and, if a building does not offer enough functionality, it will be extremely hard to find – or even keep – tenants. Even before a potential tenant investigates the building itself, he might decide against signing a lease if he notices, for instance, that there is a lack of parking or the entrance to the building feels cramped. He might not even bother going inside and look at the rest of the building.

“A potential commercial developer must seek the right advice from the start. Speak to a commercial property broker and ask which buildings struggle to find tenants. Seek out tried-and-tested professionals and, on their advice, go and visit successful buildings – the ones that always have tenants.

“ These are the ones, in our opinion, that have been designed properly from the start –and these are the ones that will make money for their owners in years to come,” said Geldenhuys.

A core caveat remains: be careful which architect you use, otherwise you may end up with a white elephant.

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