Inherited the Sydney fringe family shop top? 10 questions to ask before you sell

For decades, the corner shop with the flat upstairs was the backbone of Sydney’s city fringe. Families who arrived from Greece, Italy, Poland, Lebanon and across Europe in the 1950s and 1960s bought a modest building, opened a deli, hardware store or workshop downstairs, raised their children upstairs, and built a life one customer at a time.

The shop top is the classic example, but it was never the only one. Many of those same operators bought the premises for their bakery, panel beating shop, printing works, tailoring workshop, small factory, warehouse, café or professional rooms, because owning the building was the safest way to secure the business.

Now that generation is retiring or passing on, and their children, with careers and lives elsewhere, rarely want to take over the business. If you are one of those children, or a co-owner, or an executor, you are probably facing a big question: what do we do with the property?

It is a bigger question than it looks. Properties like these often sit on land that has become far more valuable than the business ever was. Getting the answer right takes a little time, the right questions and the right team around you.

Part 1: Sort out the estate and family ownership first

Before anyone talks price or timing, make sure the foundations are solid. Disagreements at this stage are the most common reason sales stall.

1. Is probate granted, and does the executor have authority to sell? Without the right legal authority, a sale cannot proceed. Your solicitor can confirm where things stand.
2. Do all beneficiaries or co-owners agree on selling, timing and price? If not, how will disputes be resolved? It is far easier to agree on a process now than to argue mid-campaign.
3. Do the will or a trust deed restrict or direct the sale? Some documents set conditions, or even name who must be involved.
4. Who decides on the sale method and the agent, and how will proceeds be distributed? Clarity here avoids resentment later.
5. If emotions are running high, is mediation worth considering before listing? This was Mum and Dad’s life’s work, and the building holds a lot of memories. A neutral mediator can help a family reach agreement before the property goes to market, which often saves time, money and relationships.

Part 2: Understand the value and the potential

This is where many families are surprised. The value of a shop top, workshop or other business premises as it stands is only part of the story.

1. What is the property worth as it stands, and what is its redevelopment value? An investor or owner-occupier may value it very differently from a developer, and the gap can be significant.
2. What do the current zoning, height and floor space ratio controls allow? These are set out in the local environmental plan (LEP) and development control plan (DCP). Rules change over time, and what applied when the owner last checked may no longer be the case.
3. Is there upzoning, a precinct plan or transport-oriented development nearby? New Metro stations and government planning programs have reshaped what is possible around many parts of Sydney, and sites near them can attract serious attention.
4. Would the site be worth more combined with neighbouring lots? Developers often pay a premium for larger, more workable sites. Approaching your neighbours first can sometimes unlock value for everyone, but it needs to be handled carefully.
5. Is there developer interest that justifies an expression-of-interest campaign instead of a standard listing? For sites with real development potential, a targeted campaign can bring the right buyers to the table and create competitive tension.

Don’t forget the tax questions

The sale of a long-held commercial property, especially one with a residence attached or one passing through a deceased estate, can have significant tax consequences. These might include capital gains tax, the treatment of any residential component, GST, land tax and the timing of the sale, along with how things are handled if a business is being wound up.

The rules are complex and depend heavily on individual circumstances, such as when the property was acquired, how it has been used and who now owns it. 

Note: We are not legal, tax or financial advisers, and we would not presume to guide you here. What we strongly encourage is that you speak with a qualified accountant and solicitor before you sign anything or commit to a timeline. The right advice early can make a considerable difference to what you keep.

Where we can help

Our agents know the city fringe streets, the planning landscape and the developers actively looking for sites. We can help you:

• Understand what your property might be worth to different types of buyers
• Interpret what current planning controls may allow, and what is changing nearby
• Assess whether amalgamation with neighbouring sites could add value
• Decide between a standard sale and an expression-of-interest campaign
• Run a respectful, well-managed process that works for the whole family

We will always work alongside your legal and financial advisers, not in place of them.

This article is general information only and does not constitute legal, tax or financial advice. Please consult qualified professionals about your own circumstances.

Let us help you with your Sydney city fringe commercial property

As dedicated local commercial real estate agents, we can help you extract more value from your commercial property. Please get in touch to discuss your circumstances and assets so we can give you personalised advice. Whether it’s commercial leasing, management or sales, we’re here to help you with your Sydney-based commercial property.

Contact us at Ray White Commercial Sydney City Fringe