With vacancy rates heading towards historic lows and rents increasing, investors are quickly realising that the commercial property market is a viable and potentially lucrative investment option.

The Queensland commercial property market – which incorporates the three main sections of commercial, industrial and retail – is performing very well.

It is being underpinned by strong growth in the Queensland economy. Vacancy rates are extremely low and investment demand is very high, with continued pressure on yields.

While more people are considering the commercial real estate market as a viable investment option, when compared with the residential property market, there are some pros and cons to consider.

Advantages of investing in commercial property

• There are higher true returns (6 to 10 per cent).

• The tenant is responsible for all outgoings (rates, insurance, etc) except land tax.

• The lease terms are generally significantly longer (three to 10 years).

• Rental increases are sometimes fixed at the beginning of the lease term, negating the negotiation process.

• There is less chance of the tenant absconding.

• There is an opportunity to have several tenants in one building and spread your vacancy risk.

Disadvantages of investing in commercial property

• The obsolescence of buildings and the need for periodic refurbishments.

• The capital expenditure items to maintain a building can be high.

• In general, vacancy periods can be higher than those for residential properties.

• It can often be more difficult to enter the market.

For a list of REIQ accredited residential and commercial agencies in your local area visit www.reiq.com.au or phone (07) 3249 7347.