Analyze the profitability of your commercial investments
Commercial real estate offers higher yields than residential (5-10% gross) with long secure leases, but requires thorough market and tenant analysis.
Commercial real estate covers premises intended for professional use: shops, offices, warehouses, restaurants. Yields are generally higher than residential but risks (vacancy, works) are also greater.
Commercial lease (3-6-9)
9 years minimum
Revision : ILC
Most common. Tenant can terminate every 3 years.
Professional lease
6 years minimum
Revision : Free
For liberal professions (doctors, lawyers, architects).
Short-term lease
3 years maximum
Revision : Free
Short lease without renewal rights, ideal for testing a business.
High yield
5% to 10% gross depending on premises type and location
Long lease
Tenant commitment over 3-6-9 years, predictable income
Recoverable charges
Property tax, maintenance, insurance often borne by the tenant
Long vacancy
Finding a new tenant can take 6 to 18 months
Costly works
Compliance upgrades, tenant-specific fit-out
Tenant dependency
Property value is linked to the quality of the current lease
ILC
Commercial Rent Index
Used for : Shops, craftsmen
ILAT
Tertiary Activities Rent Index
Used for : Offices, liberal professions
| Criteria | Commercial | Residential |
|---|---|---|
| Gross yield | 5% - 10% | 3% - 5% |
| Lease duration | 3-6-9 years | 1 - 3 years |
| Average vacancy | 3 - 12 months | 1 - 3 months |
| Tenant charges | High | Limited |
| Lease premium | Yes (value) | No |
Watch out for commercial vacancy: it is longer and more costly than residential. Always analyze the catchment area and the tenant's financial strength.
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