In strata properties, individuals or businesses own separate lots within the overall property, and share ownership of all common areas. Strata titles are common in many types of property, such as residential and commercial.
What is Commercial Strata?
When you purchase a commercial unit that holds a strata title, it means that you will own your unit, but will share ownership (and responsibility) of shared areas on the parcel of land. These areas can include car parks, elevators, toilets and other amenities.
Each unit owner will pay regular strata levies for the ongoing administration, maintenance and upkeep of these shared areas, often referred to as common property. The collection of these levies, and overall maintenance of the property and its common areas is handled by the Council of the Strata Company, or their appointed Strata Manager.
Pros and Cons
Strata titles offer a range of benefits for commercial property owners. Not only can you access a great range of amenities while sharing the cost with other owners, you can also access a wider range of customers due to the shared attraction from multiple businesses on the property. Strata properties can also be cheaper than freehold options because each business owner pays their own council and water rates, and the cost of shared amenities is shared between owners.
On the other hand, there are some constraints. Given that the exterior of the property is usually jointly owned by the Strata Company members, individual businesses might be restricted by how they manage their external signage, and may need to seek approval from the other owners before making any changes. Businesses may also face restrictions when changing the overall size and structure of the lot or their use of common areas.
Things to consider
1. How well is the Strata Property managed?
A Strata Manager looks after all of the complexities that go hand-in-hand with a strata titled property. Commercial Strata Management can be complicated in terms of compliance and insurance, so you’ll want to be certain that the Strata Management team is equipped for the job.
If common areas of the property appear neglected, or if the strata levies seem questionable (whether they are too high or suspiciously low), you might want to ask the other owners some questions about their overall experience.
2. What kind of condition is the common property in?
Pay close attention to what the common areas of the property look like. If the property is well managed, it means levy contributions are more likely to be reasonable and the Strata Company may be more proactive in arranging any upgrades or repairs. Additionally, a good Strata Manager will help ensure all major works are planned for appropriately so as to keep levies reasonable over time.
3. Could the strata title determine how the property is used?
Yes. Strata Company behavioural by-laws can be implemented if more than 50% of owners agree(and no more then 25% disagree) to them at their Annual General Meeting (AGM). De-pending on the strata property, by-laws could impact business signage, parking spaces and property upgrades. As a building owner, you can request to review the by-laws prior to purchasing to ensure it is aligned with your plans for the property.
If you’re still unsure whether a strata titled property is right for your business, get in touch with one of our professionals and we can talk you through it.