Inside Edge: Rise of the Commercial Buyers’ Agent

Bagging an off-market deal can be the key to development success—but there is an art to it. And Tas Costi knows a good deal when he sees one. Costi [ pictured above, on left] saw an opportunity in the market, moving to set up Australia’s first dedicated commercial buyers’ agency—because it’s not just what you know, it’s also who you know. Costi began his career in property development and says he saw a “serious gap” for buyer representation in commercial deals. “I brought the idea to Simon Cohen, who had already built the top-performing residential buyers’ agency in Australia, Cohen Handler,” Costi says. With latent demand and an untapped market, Costi says, Cohen came on as business partner to help set up Costi Cohen, a pure-play commercial sector buyers’ agency. “[It’s] the first dedicated commercial buyers agency in Australia, offering investors, developers and owner-occupiers expert support to source off-market opportunities, complete the due diligence and negotiate the best price,” Costi says. And now with a few years under the belt, the agency has bought up almost $1 billion in property for its clients. A commercial buyers agent helps clients, including investors, developers or owner-occupiers, find and secure commercial property. Costi says this is a full-stack service that finds off-market or pre-market deals, conducts due diligence, negotiates the best price and navigates through to settlement, which can be an arduous journey. ▲ Some of Costi Cohen’s recent deals across development, industrial and mixed-use sites. The agency operates nationwide, tapping every asset class for its clients and, while it’s a somewhat niche and nascent industry, Costi says it is picking up quickly. “Unlike the residential market, where buyers’ agents are more common, there’s a lot less competition in commercial, which opens up huge opportunities for those who understand commercial property,” he says. Costi says commercial property buyers have to navigate more complicated acquisition processes. “There is more due diligence required such as negotiating lease structures, and applying development and zoning requirements. “Most transactions are often at a higher price point so assessing things like the property’s development potential or evaluating the opportunity for capital growth is important on every deal.” This has been a significant driver in the demand for specialised commercial buyers agents such as Costi Cohen, servicing clients including seasoned developers chasing new opportunities through to mum-and-dad investors looking for passive investments with strong returns. “[We want to] represent buyers in the commercial property market, where buyers often lacked experienced representation, as compared to landlords who have always been represented by selling agents,” he says. And it’s a trend that seems to be gaining momentum as the number of investors diversifying out of residential and into commercial assets continues, according to Ray White head of research Vanessa Rader. Commercial buyers’ agents on trend “Specialised buyers’ agents have played a crucial role in expanding the portfolios of many individual and family investors nationwide,” Rader says. “These agents facilitate investments in assets across Australia, promoting diversification and encouraging local and interstate investments in new asset classes. ▲ Ray White head of research Vanessa Rader says the proliferation of commercial buyers agents is likely to continue into 2025. “Equipped with data and a long-term investment mindset, this emerging class of buyers has become increasingly prominent in the market. They show particular interest in retail, industrial, childcare, fast food, and medical assets. “Private buyers continue to dominate the current market, taking advantage of rising capitalisation rates, and we are anticipating this trend will persist throughout the remainder of the year.” Strong appetite for exclusive deals Costi says it’s not just about helping buyers find the right properties, it’s also about the right deals. “Many are also looking for access to exclusive opportunities and expert guidance to navigate the complexities of commercial deals and to ensure they get the best value,” he says. And in order to provide this to clients, Costi says, a strong market knowledge is essential for agents, as well as a good understanding of property values and trends, and an eye for opportunity. “Networking is equally important, as many of the best deals are off-market and require deep relationships with agents and vendors,” he says. “Strong negotiation skills are key, as getting the best terms for clients usually comes down to knowing how to find the right angle in a deal.” One of Australia’s biggest commercial buyers’ agencies, Rethink Investing, moved into the New Zealand property market this year. Part of the Rethink Group, which also includes residential, renewables, finance and legal, founder Scott O’Neill described the move as a significant milestone as the first at-scale commercial property buyers’ agency in New Zealand. ▲ Rethink Group founder Scott O’Neill has crossed the ditch to take on the NZ market. Rethink Investing has transacted on $4.25 billion in property for its clients during the past eight years and is out to corner the market in New Zealand. And they might be on to something as more investors abandon residential property amid increasing prices, high interest rates and legislated tenants’ rights that make the asset class less appealing. Sub-$10m deals on rise Rader says there has been strong interest in commercial assets priced under $10 million, driven by a diverse group of investors. “While buyers’ agents have been promoting diversification into commercial property, local market investors and owner-occupiers are also actively seeking quality investments for long-term holds,” she says. “This price segment is expected to remain a key driver of activity in the commercial marketplace, as it hasn’t experienced the same level of turnover compression seen in the higher-end market. “The buyer pool for these sub-$10-million assets remains robust, with savvy investors eager to pursue long-term opportunities.” Rader says value-add opportunities for redevelopment and repositioning are experiencing strong demand while owner-occupiers also look to invest. As of June, 2024, average Australian prime yields stand at 5.4 per cent for industrial, 5.9 per cent for office and 5.7 per cent for retail properties. These rates have increased 150 basis points from the market peak, resulting in capital value corrections. But, Rader says, the capitalisation rates will face continued pressure to restore the spread to “investable levels”. Costi says while there may be a lot of stock on the market currently, it is overpriced. “The key is not only sourcing the right deal for each client, but structuring the right negotiation strategy to secure some of the best deals in the market,” he says. “It’s not just about finding any property but securing the one that aligns perfectly with the client’s needs and investment goals. In any case, buyers are still prepared to pay above market for quality assets, so getting access to these opportunities before anyone else is key.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

Inside Edge: Rise of the Commercial Buyers’ Agent

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