ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Commercial Property As An Investment

Updated on December 20, 2013

For those investors looking to spread the risk element amongst their assets, commercial property investment could make for a prudent addition to your current property portfolio.

The property market crash of 2007/2008 saw many investors lose significant amounts of money, yet prior to this, many investors (mistakenly) believed that property investment was virtually risk-free. Unfortunately, when it comes to financial speculation there is no such thing.

There are basically two main ways for an investor to make money from commercial property:

1. Rental income (letting your property to a tenant).

2. Capital growth (as a result of the property increasing in value).

Commercial property isn’t typically affected by what is happening in the stock market as are other types of investment opportunities, so for those seeking to diversify and spread risk, this option could be well worth considering.

Other than purchasing commercial property outright; which could be a barrier to entry for many people, another route to ownership is through what’s known as a “collective investment scheme” – for example a unit trust, Open Ended Investment Company (OEIC), or investment trust – harnessing the power of group buying to facilitate investment in a varied portfolio of commercial properties.

Commercial property generally can make for better investment potential than residential property – particularly in the UK where leases on commercial buildings in the capital regularly extend from 10-15 years. Contrast this with residential leases which typically run for between six months to one year at a time and the advantages will become clear.

Also, the average commercial lease generally attracts a significantly higher rental income than a comparable residential property. What’s more, the good news is that there are a number of commercial investment schemes which you can enter with around £50 per month, or a lump sum of £1000.

Indirect property funds are another form of collective investment scheme, only this type of scheme involves investing in shares from property companies that are listed on the stock market. As property shares are subject to fluctuation these types of initiatives do not attract the same benefits as direct investment schemes.

If you decide to invest in your own commercial property portfolio then expert advice is a must and it’s well worth spending some time scouring the Internet to see what commercial estate agents have to offer. When selecting commercial property, location is a prime consideration and here specialist local knowledge can be a tremendous asset. If you intend to purchase in an area you are unfamiliar with, then the Internet can be a terrific help, though there’s no substitute for “real world” knowledge.

Letting your commercial property shouldn’t prove too much of a problem providing you have chosen the location wisely. The key to success will be to minimise void periods as much as you can. In some cases you when you buy into commercial property you will ‘inherit’ sitting tenants – and whilst this issue could prove problematic with residential property, it is pretty much the norm with business units, workshops and warehouses. In the majority of cases – and with a professional management system in place – overseeing a commercial property portfolio can be far less hassle than with residential buy-to-let investments.

Or indeed you could compromise and savour the best of both worlds by investing in ‘shops with tops.’ These are, (as the name suggests), shops with one or two flats above them – handy for renting to business owners who would prefer to live on the premises.

Whichever type of investment you plump for, you will need to do your due diligence. Points to consider within your chosen location are:

  • How good are the public transport links both locally and from out of town?
  • Is there ample car parking space on or around the premises for staff and visitors?
  • How busy is the location generally in terms of footfall?
  • Are business rates reasonable? (Remember, you will be responsible for meeting the payments during any void periods).
  • How easy is commercial property to let in your preferred area? (Do some research online and also contact local agents which specialise in commercial property lettings).
  • Do any well known companies rent space nearby? (An excellent sign).

If you are serious about investing in commercial property then there can be good money to be made providing you are not looking for an instant return. But whether you are seeking to invest in commercial property or residential property, a comprehensive management system with which to monitor your portfolio is essential.

To this end the latest CAFM software can make managing your portfolio a breeze with ‘at a glance’ information that can monitor KPIs and help you maximise your assets’ potential and ensure your investments remain on track.

As with all types of investment opportunities or financial obligations, independent financial advice from a qualified professional source is essential before entering into a legal contract.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)