7 Key Considerations for Commercial Conversion Projects.

There is a simple process which you can follow in order that you can successfully evaluate a commercial conversion. Critical steps need to be followed in order that you can establish if there is money in a deal.

You can complete these quickly when looking at a property, which enables you to easily sort the wheat from the chaff.

This should be on the agents details (or a less accurate source could be the EPC). Net internal area (NIA) would exclude lobbies, stairs, toilets etc – some of which can be used in apartments however so Gross internal area is more relevant.

Buildings with a deep floor plate where natural light is not transmitted to the center of the building will have less useable space for bedrooms/conversion to residential than a long thin building. Long buildings have more external wall area and therefore opportunity to use the space more efficiently by getting light into bedrooms.

Generally bathrooms, corridors and if you are really struggling lounges can be sited towards the centre of the building where there is no natural light.

Towards London you are more likely to be going for smaller units where I have seen new 1 beds as small as 32-40 SQM, this could be as high as 55SQM for higher spec developments and those which are further into the Midlands/North. 2 beds might be more like 45-65 SQM per unit.

Take about 10% off for corridors, stairwells etc and with the above sizes in mind you will have an idea of how many units you can get from each development, giving you a rough Gross Development Value. You can get an architect in later to sense check this and ensure you have your numbers right once you start to spend some money on the building.

Which should give your purchase price.I look for a 15% minimum as I don’t feel it is worth the risk/my time to participate in projects which will yield less

Expect the project to take 2 years from start to finish and don’t borrow money for any less than 18 months, as in reality things will come up and delay the project.

Any less and you put yourself at risk of price rises, poor service or suppliers that are no longer able to provide what they once did which could put your project at risk.

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