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19 March 2024
Investors benefiting from excellent yields from small mixed use commercial and residential properties

Small mixed use properties across East Yorkshire are proving increasingly popular with investors due to their excellent yields, a commercial property expert says.

Paul White, a director of Hull-based Garness Jones, says the properties – often the home to businesses like small retailers and cafes – are being ‘snapped up quickly’ when hitting the market, as they are currently offering great returns.

“We’ve done a lot of business of late in terms of advising local investors of the best opportunities in the market, and small premises which offer a mix of commercial and residential space are making for particularly good investments,” he said.

“At any one time we are usually marketing a good number of these kinds of premises at Garness Jones, but of late we have seen a significant increase in interest from investors, as they are creating good returns.

“These kinds of premises are not stopping on the market for long and we’ve acted for investors who have purchased multiple opportunities.”

Properties are ‘great income generators’

Mr White says the market is proving particularly attractive and fruitful for those with the funds to purchase such properties outright, without being tied to a mortgage, allowing them to generate income from both commercial and residential use.

“These are the kind of investments are proving great income generators, especially when people are able to buy them for cash and without the need for a mortgage,” he said.

“We have helped local investors to identity a number of small mixed use premises for purchase which have the potential to generate Net Initial Yields of 8% -10% dependent of location and term left on the  leases .

“Planning policy on use classifications of commercial premises changed, these properties fell into the Class E categorisation which covers a wide range of usage purposes, from retail to offices for financial and professional services, or even restaurants and cafes, or leisure.

“Significantly there is no need for business owners to apply for permission to change between these approved usages, so that is helping landlords in their search for tenants. Business owners can simply get in and start up.”

Mr White said a recently completed deal for an investor had seen them purchase two mixed use properties in East Yorkshire which ‘should easily find business tenants’ and have the opportunity to rent out residential accommodation on the first floors.

“They key is in attracting small independent businesses as tenants, which of course we help with, and then considering what can be done with the space above.

“These premises are often suited to being converted into residential lettings, which again can prove to be excellent income generators.”

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