There’s an emerging style of enterprise in the Townsville business sector that’s having a negative effect on demand for Commercial Real Estate (CRE) premises here in Townsville.
One humourous local advisor has termed the group BMAJoR short for “Bought Myself A Job, Really” and we think this group can damage Townsville’s investment property marketplace.
Looking at the latest Australian Bureau of Statistics business counts for the Townsville region we see that Non Employing category makes up 57% of the 11,972 businesses in Townsville.
Are all Non Employing businesses BMAJoR's though? Absolutely not! There are many Non Employing businesses that have aspirations – and business plans – to expand their operations, improve their profitability and expand their workforces. These businesses and the entrepreneurs behind them are vital to the Townsville economy.
These businesses are not BMAJoRs – these are businesses that are just “small” at the moment, they are the source of much innovation and growth for Townsville (if you are one of these businesses that are just small at the moment, we can help – click here to get in touch!)
BMAJoRs by comparison are operated by an individual that has no appetite for growth nor plans for expansion. The BMAJoR is vastly different to a genuine small business in both attitude and action – the BMAJoR is focussed on ensuring their customers and their revenue levels do not disrupt the BMAJoR lifestyle.
The BMAJoR often trades shorter hours (or exclusively online), minimises customer interactions (the “just text me” approach) and relies exclusively on reactive word-of-mouth (as against actual marketing for growth) to retain an income at their required level.
From a Commercial Real Estate (CRE) perspective, the BMAJoR avoids genuine lease commitments (taking licences up to 12 months only), does not engage professionals for their legal, financial or fit out works (preferring to do it themselves) and will not provide any history or security to support their tenancy obligations (generally because their financial position is relatively poor).
Commercial Real Estate investors seeking BMAJoR tenants as part of their tenancy mix need to carefully consider the above characteristics and ensure the rental income they receive from these type of tenants suitably compensates for the valuation and cashflow risks of default and underperformance that are inherent in the BMAJoR model.
An experienced and qualified CRE agent will be able to assist investors with leasing solutions to maximise cashflow and minimise valuation risks. For an appraisal on your Townsville CRE investments please contact me by clicking here.
CRE Agent / Explore Property Townsville