Market Updates

July 21, 2016

Nichols Crowder - partner and problem solver

Just as it is vitally important for commercial and industrial tenants to find the right property to grow their business and successfully service clients, it is also crucial that landlords find the right tenant for their properties.  A mutually beneficial tenant/landlord leasing arrangement not only ensures a smooth relationship throughout a tenancy term, it can also provide other benefits when it comes time for a landlord to sell.

Josh Monks, Sales Executive, explains, “Today’s agent has evolved from a deal-maker into more of a partner and problem-solver for tenants and landlords.  When tenants have specific requirements for a site or want to upgrade a fitout, agents need to liaise with landlords to find appropriate solutions.  This value-added role is an important link between tenant and landlord.”

An example of this occurred with the recent sale of 120 Frankston Gardens Drive, Carrum Downs.  The site was sold to the tenant, Australian Dairy Park, which specialises in the manufacture of milk powder for infant formula.  The tenant had invested $5 million in a new fit-out, and had an option to purchase the property for an agreed amount within a specified time period.  At the same time, the owner received excellent rental of over $1 million over the past three years.  If the tenant had elected not to exercise the purchase option, the owner still had a long-term lease and a very saleable site.

Monks continues, “A site of this size is difficult to sell.  However, we were able to find a tenant that was prepared to enter into a long-term lease with an option to buy.  These agreements were undertaken with the assistance and advice of Nichols Crowder, providing a win-win result for both parties.  The tenant had the security of knowing any upgrades to the site were not going to be wasted, while the landlord was able to minimise financial risks and plan for future cash flows.  The selling price of $4.9 million for the 1.2 hectare site provided a solid return for the vendor.”

This example shows the benefits of a landlord engaging an experienced commercial and industrial agent when leasing out and selling their properties.  The team at Nichols Crowder has extensive experience working with tenants and landlords across a wide range of commercial, industrial and retail sites.  This three-way relationship is important to meet the needs of tenants and landlords over the long-term.