1. Location - heart of a commercial center,
Location is the most important condition in real estate. In terms of the current Taipei,
the North Dunhua-Minsheng, South Dunhua and Xinyi District areas are the three big A office block areas.
2. Traffic – Location availability
Traffic is the lifeline for commercial development. Good and moving traffic enables business
development followed by prosperity. Currently, along with the MRT lines, the three links Songshan Airport are the hottest.
3. Age – New Buildings
Grade A Office Buildings are equipped with software and hardware that include a stylish exterior,
a luxurious lobby, sufficiently high ceilings, SRC structure and other advanced facilities.
4. Software – Excellent Management
Good management is an important condition for the building. Strict management can maintain the quality of the building.
5. Lessee – well known companies in place
The lessee is also an important condition for Grade A buildings. Previously, half the Grade A offices were only leased to listed companies.
6. Lesser – Sole property rights and floor space
Having sole property rights of an office building can maintain management quality.
Should property rights be a mess, then neither tenants nor management quality can be addressed.
Further, floor space is often related to the quality of management and tenants.
Sufficient floor space can accommodate upper-class tenants. Landlords that can afford a large area often have the
management awareness to maintain the quality of the building.
Of course Grade A buildings only confers a probable definition. B and C Office buildings are relative A buildings.
B buildings are those that meet 3-4 of the above-mentioned conditions and C buildings meet 1-2 of the above-mentioned conditions.
The investment rate of return for commercial offices – gross rental yield capitalization rate (4%)
Office buildings are a different type of product from residential buildings. Most buyers of
commercial real estate are investors. Therefore, the rental price of commercial real estate products
is directly linked to the value of the product itself. You can say that if the rent on a commercial
property is not pretty, then the product itself has a low value. Currently in Taiwan, along
with different targets of investment, there are fluctuations in the economy.
Investors’ willingness to place the return on investment is also different.
Along with different kinds of environmental conditions, differences can lead to different gross
rental yield capitalization rate. However generally speaking, domestic or international large
foreign corporations cross into the assessment phase and consider the basic gross rental yield
capitalization rate for investments to be around 4%. Customers are welcome to use this as a reference.
Commercial office investment trap- vacancy rate (5-15%)
The purpose of buying a commercial property is for the rent, then the biggest enemy of
commercial properties – vacancy rate; this is what investors are most concerned about.
The vacancy rate of a commercial district is often decided by whether business activities are flourishing.
The vacancy rate shops can be easily learnt merely by walking around. There is no need for
long-term cultivation nor expertise. By looking at the crowd, traffic, closed doors and red tapes and you will know.
However, the vacancy rate of office spaces is more difficult to find out. At times like these, you can get more accurate
information via professional commercial property estate agents. You can ask the commercial property agent
directly or read news and market research reports.
Under normal circumstances, the vacancy rate of mature commercial districts moves
between 5 and 15%. Close to 5% is a very low vacancy rate. 8-10% is a reasonable area.
If it is over 10% then you should observe closely. If it is not a new commercial district or
a newly constructed building and if there are many areas for leasing, and if the vacancy rate is over 20%,
then you need to think twice of such an investment.
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