For obvious reasons the larger transactions in the worldwide real estate market always grab the headlines. We are often talking about billions of dollars of investment linked to both corporate and individual clients. It is therefore no surprise that investing in small business office developments is not necessarily top of the agenda for many people. However, there are benefits to investing in the small business sector which are often overlooked.
Whether you are looking at the UK, US, Australia or any other part of the world, entrepreneurial spirit has returned even stronger than before. There is no doubt that the implementation of the Internet has had a massive impact upon the worldwide business market but what about the small business sector?
Many small businesses have emerged which are literally “middlemen” bringing together customers and suppliers and delivering goods and services. This type of small business model works on margins but it has a monumental impact upon base running costs. There is no need for large factories, no need for warehouses and just a handful of people can very often look after a relatively large business. So, this is where small business developments come in with many now offering office space to an array of companies.
Balancing supply and demand
One of the most obvious elements of any market is balancing and forecasting the supply and demand of a service or product. In this instance we are talking about small business office space, very often within a small business centre that can house dozens of companies. Wherever you live in the UK you will not be very far away from a small business centre where long-term investment in office space is proving to be very lucrative.
There are many incentives for small businesses including rate relief, tax relief as well as specialist funding. All you need to do is find an area with a growing entrepreneurial spirit, a small business development which is doing well but could do better and you have a potential investment to consider. The very fact that many small business centres house dozens of different businesses offers the opportunity to spread the overall risk and if demand for small business office space is strong in the area it is unlikely any vacated offices will be empty for too long.
Spreading your risk
Those looking to build a long-term property portfolio would do well to consider spreading the risk across a variety of different subsectors including domestic housing, corporate offices, new developments and the small business sector. The small business sector may not seem the largest or the most lucrative of this group but if you research different areas of the country and the variation in returns you will be surprised.
Many of the tax breaks available to small businesses have been around for years and are likely to remain an integral part of the sector going forward. Let’s face it, some of the small companies of today will be the large companies of tomorrow and therefore governments and local authorities around the world have a vested interest in getting these businesses off the ground. Providing small business office space is an integral part of this sector and one which many investors could benefit from.