A Commercial Mortgage Guide for Strata Office Suite Owners
Owning the strata office suite your firm works from is more within reach than many practice owners expect. Bought well, the space you occupy becomes an asset that builds equity and gives you control of fit-out, signage and timing. Ardent Capital Group speaks with professional and allied-health owners about this kind of commercial purchase, and this guide explains how a lender sees it.
Ardent Capital Group is a specialist in commercial mortgages for strata office suite operators across Australia. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.
- Access finance from $100,000 to $10,000,000+, tailored to owner-occupiers and investors.
- Over $500,000,000 facilitated in commercial loans across the past decade.
- Service Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Hobart and surrounding regional towns.
- Bank, non-bank and private lender options with structures aligned to cash flow and tax settings.
The structure matters, and our specialists build an office property loan around your situation.
What ownership gives a strata office suite operator
Fit-outs in office suites are rarely transferable. Partitions, glazing, soundproofing, data cabling, boardroom AV, reception joinery and specialised medical or allied health rooms are sunk costs if you move. Owning lets you amortise that spend over the life of the asset.
Location matters. Client and patient bases are tied to CBD fringe, suburban business hubs and medical precincts with parking and transport access. Staying put helps retention and referrals.
Demand is steady across professional services, allied health, finance, legal and tech, particularly for well-located suites with car spaces on title.
Repayments build an owned asset. Instead of annual rent rises and end-of-lease make-good, you control upgrades and timing. Net holding costs include strata levies, sinking fund, council rates, insurance and interest, which can compare favourably with rent for similar stock.
Main drivers:
- Control of fit-out, signage and operating hours without landlord approvals.
- Certainty on occupancy and no make-good at lease end.
- Ability to align rent to your cash flow where a related entity holds the title.
- Potential to package car spaces and storage on title, which support valuation and future resale.
Buying may suit less well where you have a short planning horizon, a likely relocation or space change, a limited deposit with stronger returns available from hiring, marketing or equipment, or concerns about upcoming special levies in the building. The call is yours, and we are glad to talk it through either way.
How a strata office suite purchase is funded
Deposit and LVR. Standard commercial office space, including strata suites, typically gears to around 80 per cent of value, so the deposit is commonly around 20 per cent from cash or equity. Where you hold equity in another property, that equity can serve as additional security to fund up to the full purchase price and costs, which our broker team can walk through. Owner-occupier profiles in prime metro locations, particularly with car spaces on title, tend to see lender appetite at the stronger end.
Loan term and structure. Terms commonly run from 10 to 15 years with a bank and up to 25 to 30 years with a non-bank lender. Principal and interest stabilises the debt and builds equity, while interest only can carry a period where cash flow is the priority, then convert to amortising.
Security and serviceability. Lenders take a first mortgage over the suite, often with director guarantees and, at times, a general security over the borrowing entity. Serviceability is assessed on business financials, addbacks and a coverage ratio, with strata levies and sinking fund contributions treated as expenses. Where you lease back from a related entity, the rent must sit at market.
Owner-occupier treatment. Lenders generally favour owner-occupiers for pricing and structure because default risk is lower when the premises is essential to trading.
Common holding structures
Many strata office suite operators hold the premises in a separate entity, such as a company or a discretionary or unit trust, and lease the suite back to the trading business at a commercial rent. A lender reads that inter-entity rent as the serviceability line, so the arrangement gives clear evidence of income while separating the operating business from the property. It also makes a future sale or succession cleaner.
Where a self-managed super fund is involved, commercial premises usually qualify as business real property, so an SMSF can hold the suite through a bare (custodian) trust and lease it to the business at market rent under a limited-recourse arrangement. That suits a long-term hold in a concessional environment, and it comes with lower LVRs, longer lead times and strict compliance. Ardent handles the finance and which lenders take this security and on what terms, and your accountant and SMSF adviser set up and confirm the fund and tax detail.
What a lender looks at
- Business financials: two years financials and tax returns, BAS, current management accounts, ATO position and any payment plans.
- Serviceability: debt service coverage ratio with sensitised interest rates, addbacks for depreciation and one-offs, treatment of owner's wages and dividends.
- The property: location, floor area, natural light, configuration, on-title car spaces and storage, building condition, strata records and sinking fund health, any cladding or compliance issues, and the independent valuation.
- Deposit and equity: cash, retained profits, or equity in residential or other commercial property, with clear source and statements.
- Lease and occupancy: for owner-occupiers, an internal lease at market terms; for investors, tenant quality, remaining lease term, options and rent review structure.
A specialist broker who understands strata office suites can present the asset and the trading profile to the lenders whose appetite suits it. Pricing, LVR and terms are always the lender's call, subject to serviceability and approval.
An illustrative scenario
This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.
- Situation: a three-partner accounting firm renting 85 sqm in a suburban business centre, paying $55,000 per year gross, with a $120,000 fit-out they would forfeit on relocation.
- Target purchase: a neighbouring 90 sqm strata suite with two car spaces on title at $750,000, plus $40,000 in stamp duty and costs, and around $30,000 for minor refurbishment.
- Profile: cash reserves of $220,000, clean financials, consistent profit, and residential equity available if required.
Options we would map:
- Owner-occupier loan at around 80 per cent: a $600,000 loan with a deposit and costs of about $190,000 from cash, principal and interest over 20 years, with the suite leased back at market rent to align serviceability and tax.
- Effective funding closer to the full cost: gear the suite to around 80 per cent and add a small facility secured against the home to cover costs and refurbishment, which conserves working capital for staff and technology.
- SMSF alternative: the fund acquires the suite at a lower LVR with a related-party lease at market rent, a slower timeline and a higher cash requirement, suited to a long-term hold.
How we would approach it: we would map the ranges, structures and repayments so the partners can compare them with their accountant, and the decision stays with them. The figures above are illustrative, not confirmed outcomes.
Ways we can fund a strata office suite purchase
- Asset finance for office and clinical equipment: fund servers and networking, VOIP and telephony, high-speed scanners, multifunction printers, dental or ultrasound units for allied health, and reception hardware without draining cash.
- Fit-out and refurbishment finance: partitions, glazing, acoustic treatments, joinery, electrical and data, boardroom AV and signage, arranged as office fit-out finance over terms that match useful life.
- Working capital loans: smooth BAS spikes, payroll and supplier runs while settling into new premises, the same cashflow finance for an accounting firm or similar practice that can also cover strata special levies.
- Business overdraft: revolving headroom for receivables gaps common in professional services cycles.
- Refinancing and debt consolidation: restructure multiple facilities into one clearer package that suits current profit and growth.
- Construction and renovation: combine minor works, end-of-trip additions within title boundaries, or mezzanine and office reconfiguration with progress draws.
- Business or premises acquisition finance: buy into a partnership, buy out a co-owner, or acquire an adjacent suite to expand footprint.
Owning the premises can free capacity to restructure other facilities, and a refinance can consolidate legacy debt to simplify cash flow.
How Ardent helps strata office suite buyers
ACG arranges and structures commercial mortgages for strata office suites across Australia, aligned to how you plan to hold the title and occupy the space. We match owner-occupier needs to lender appetite, LVR and terms that suit how you plan to hold and run the suite.
We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas. We have helped facilitate over $500,000,000 in funding across more than 1,000 borrowers over the past decade.
Ardent Capital Group is a specialist in commercial mortgages and our team can help you today. If you want straight answers on deposit, structure and lender fit, talk to us.
Questions worth asking
How much deposit do I need to buy a strata office suite?
Standard commercial office suites typically gear to around 80 per cent of value, so plan for a deposit of about 20 per cent from cash or equity. Owner-occupiers with a strong trading profile and a well-located suite tend to see the stronger end of lender appetite.
Can I use my SMSF to buy my suite and lease it to my business?
Yes, commercial premises usually qualify as business real property. Your SMSF can hold the suite and lease it to your business at market rent under a limited-recourse loan, noting lower LVRs, longer lead times and strict compliance.
Will lenders count the rent my trading company pays to my property entity?
Yes, where the rent is at market, evidenced by a lease and supported by financials. Lenders also test that the trading business can meet the rent consistently under interest rate buffers.
What costs should I budget for beyond the purchase price?
Stamp duty and legal fees, valuation and lender fees, strata levies and sinking fund contributions, council rates, insurance and any refurbishment. GST treatment depends on the vendor and supply, which is handled at contract stage.
Do car spaces on title matter for valuation and lending?
Yes, on-title car spaces, storage and good natural light support valuation, liquidity and lender appetite, especially in suburban and medical precinct locations.
Can I roll my fit-out into the commercial mortgage?
Some lenders allow a portion of new fit-out within the advance where valuation supports it. Many owners use a separate fit-out facility or asset finance matched to the useful life of the works and equipment.
What is different for an investor buying a strata office suite?
Investors are assessed on tenant quality, lease term and net yield. Owner-occupiers often access sharper pricing and higher LVRs due to lower perceived risk.
Written by
Nick Chong
Managing Director, M.AppFin, Dip. Mortgage Mgmt
Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.
