Will Retail premesis survive - help!

[sharao]

Hi There,

I am looking to buy a retail shop as an investment in south east london but after doing some study I am confused if it's viable to buy a retail unit or another house instead as an investment.

ROI in a retail shop seems around 6-10% whereas on house it's a bit less. However, I see many retail shops going out of business these days due to recession or internet booming.

I am looking for advice from someone who is or has been in my shoes and has done some research and come to a decision.

Ta
ams

 

[amy9]

I don't have direct experience but I can offer my thoughts on this....

Yes, retail is risky these days. I think your success depends largely on what you sell and your location.

Look carefully at your competition in the area. Don't do what all the other shops are doing, but at the same time, ensure to sell what people want or ideally, need.

What are you thinking of selling btw?

 

[Philip Hoyle]

Do your research.

Whilst it's true that there are a lot of empty premises in some areas, there are still plenty of locations where prime retail premises are hard to find and so remain highly priced and with little non-occupancy. For example, in my village and the surrounding villages, there isn't a single empty premise suitable for retail or offices - when a shop or office closes or moves, it's rented out again virtually immediately.

Even in run down areas with lots of empty retail properties, there's still the scope to make a decent return if you choose the right one to buy. The prices to buy will be a lot cheaper, so if you get one that is in fairly good condition, with flexible space and decent services provision, you should stand out and it should be rented more easily than nearby shops that aren't as good.

In the "run down" end of our nearest town, there are lots of empty shops on the once prosperous shopping streets (not recent, the area has been in the doldrums for 20 years or more!), yet whilst some shops have not had any tenants at all for years, others seem always occupied even though the tenants come and go. These are the ones with modern services (power, water, heating), multi use interiors (i.e. back rooms for storage, offices, changing rooms, or whatever), and a decent location (corners, close to main roads, better on street parking outside, etc). Even in the run down areas, there is a need for retail, such as off licences, convenience stores, tattoos, tanning studios, hairdressers, dress agencies, etc.

You could argue that a couple of "cheap" properties costing £40k and bringing in rent of £4k p.a. is just as good, if not better than a more expensive property costing £80k that brings in £8k p.a. There'll be more people, especially in a down turn, able to pay £4k p.a. to take a punt on starting a business than there are able to pay £8k p.a. in a better area.

You just have to do as much research as possible. The days are gone where you could buy a property, any property, and sit back and watch it rise in value and give a good income return. You have to get it right these days. It's not for uninformed amateurs. You need to know your market inside out.

 

[mixolodian]

Hi there
Im new in the business world and don't know a great deal about it
But id assume that it would be a safer bet to invest in property as everyone needs a home, but not everyone needs a business premises

 

[Thinehost]

How about a plan B. Retail investments can work but stand back and look at the surrounding area; some planning departments might look favourably on the conversion of shops to residential, especially if there is a surfeit of retail space. You'd have to be careful about costing out refitting the space and the ceiling price for residential property to make sure that there's a profit there for you.

I'm a great fan of having a plan B.

M

 

[athanne]

As much as they might appear risky, retail shops still have space in business. You ought to take enough time and do some research in different areas since there are some areas where retails shops rank very high in value. Such an area will be applicable for this kind of investment.

 

[deniser]

It all depends on your location. You say south east London. For example, East Dulwich has a thriving high street but north Greenwich doesn't.

London is different to the rest of the UK in that there is not the space to build large units easily and travel is timeconsuming as most people don't drive in London so people do actually use their local shops.

I am in London at the moment and between where I am standing and where I parked my car under a mile away, there are at least 20, if not more, convenience stores alone. The place I have just come from - a medium sized town outside London - does not have a single convenience store in its town centre because the large supermarket chains have a monopoly. So it's all about location.