At a glance
- Investors focus on returns; owner-occupiers focus on functionality and location.
- A vacant property is often more attractive to owner-occupiers, while a tenanted property appeals more to investors.
- Financing terms and timescales differ by target market.
Two different approaches to buying
An owner-occupier assesses a commercial property for its suitability for their own business operations: location, layout, permits and scope for expansion carry considerable weight. An investor primarily calculates the expected return: gross initial yield, net initial yield, remaining lease term and tenant quality.
What this means for the asking price
For a vacant, functional property in a sought-after location, an owner-occupier may be willing to pay more than its investment value to an investor, precisely because they assess its value to their own business rather than its yield. For a property let on a long-term lease to a reliable tenant, an investor is often the better, quicker buyer.
Financing and timescales
- Owner-occupiers often finance part of the purchase with business credit alongside a mortgage loan.
- Investors more often use an established financing structure and due diligence process.
- Standard processes can sometimes make the timescale for a sale to an investor more predictable.
How to identify the target market
- Establish whether the property is vacant or let and, if let, the remaining lease term.
- Consider the market appeal of the location to both target groups.
- Have a commercial real estate agent calculate both scenarios before setting the asking price.
Tailoring marketing to the target market
For owner-occupiers, emphasise functionality, layout flexibility and scope for expansion; for investors, present return figures, tenant quality and the remaining lease term prominently at the front of the sales particulars.
Frequently asked questions
Can I market the same property to both target groups at the same time?
Yes, many commercial real estate agents approach both target groups in parallel and use the responses to determine which party makes the best offer.
Is the commission different when selling to an investor?
Not necessarily; the commission mainly depends on the agreement with the agent, not on the type of buyer.