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DEMAND FOR premises that people can live in and work from is proving a boon for owners of smaller commercial properties that might otherwise be difficult to lease. Laura Osborne, a commercial leasing broker with Jones Lang LaSalle, said she was fielding a growing number of calls from people looking to lease commercial premises they could live and work in. They were usually professional couples, one of whom had a work- from-home business, or single people working for themselves, she said. Demand was being fuelled by surging house prices and rents, particularly in Auckland's central suburbs. That may have pushed home ownership out of reach for some, particularly if their business is young, and many could not afford to rent a house or apartment as well as a separate office or workshop. So they were taking a different tack and looking for commercial premises they could live in. That was proving fortunate for many commercial landlords, Osborne said, because while there was a shortage of housing in Auckland, there was a surplus of secondary commercial premises in the suburbs, and it could be difficult finding tenants for them. To be suitable, a property needed to have the correct mixed-use zoning, which many commercial properties in the CBD fringe suburbs did, Osborne said. Retail, office and light industrial properties could all be suitable for conversion to a work/live-in setup and the cost of making them liveable was not necessarily high. Often they were just a shell, such as a shop or former workshop or warehouse, but they usually already had a toilet and kitchen sink. It was relatively inexpensive to extend the toilet, add a shower and vanity and build a small kitchenette, and many tenants did not even require a full-sized stove. An internal wall could be erected to separate the living and work areas, and most tenants were happy for each of those to remain as open-plan rooms. Inevitably there would be a discussion between a landlord and prospective tenant about who would pay for what and the outcome usually depended on the length of the lease, Osborne said. The longer the lease, the more likely it would be that the landlord would pay a good proportion of the alteration costs. However, landlords who were having trouble leasing premises would often consider making such alterations to broaden the appeal of their property, and help attract a tenant. The properties were usually rented on a commercial lease rather than a residential tenancy, and most tenants looking for a work/live situation were prepared to commit to a lease for up to three years. A commercial lease also had advantages for tenants because a bond was not normally required and the tenants paid a deposit which covered the first two months' rent. However, it would also normally require the tenant to be responsible for outgoings such as rates and insurance. The biggest demand was for premises with rents between $25,000 and $50,000 a year and the majority of tenants were looking for 100 to 200 square metres of space, Osborne said. She recently leased a larger, 428sqm, two-level premises in Newmarket, where the tenants live upstairs and work downstairs. The landlord was able to charge $10,000 a year more for the property as a live/work premises than he would have been able to achieve for a purely commercial space, Osborne said. She is also working for the owner of a modern commercial premises in Newton. It was designed as commercial office space in an attractive, modern apartment building, and despite its desirable location and features such as 80sqm of internal space and another 20sqm of deck and two side-by-side secure car parks, the landlord has been unable to lease it for more than a year. Since plans were drawn up to install a bathroom and kitchenette, Osborne has been dealing with plenty of prospective tenants. She believes more landlords should follow suit. "There'd be heaps that need to do it," she said. And many tenants weren't looking for anything flash. "A lot of tenants are happy to take on a shell, which can be a pretty run down, rough space," she said. While live/work spaces may be increasing in popularity, the concept is far from new. Many of the Victorian-era shops and offices had owners' accommodation on their upper levels, and those that remain are very popular because of their character features such as high studs, native timber floors, exposed bricks and ornate plasterwork and joinery. Ten years ago, during the last property boom, property developer Rick Martin of Cornerstone Group had great success developing light industrial units with flats attached on Auckland's North Shore, which he had no trouble selling.
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