Commercial Property

What is a Primary, Secondary or

Tertiary Property?

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Primary, secondary and tertiary markets

Primary, secondary and tertiary properties are property terms used to describe the quality of a property's location and as we all know with property three things are important, location, location and location.

Here are some examples of quality of a location:

1. The primary location would be a shop in a high street or the main part of a shopping centre.

2. A secondary shop would be one within walking distance of the high street.

3. A tertiary area would be one which is on the outskirts of towns.

There are some interesting other markets, such as a local shopping precinct, which could be considered as primary, secondary or tertiary depending on how active the market is and how much money is being spent there.

Interestingly, what are primary, secondary and tertiary areas for shops may not necessarily be for other key market sectors. Let us have a look at offices.

What makes an office primary, secondary or tertiary from a location point of view?

Offices look at more general things, such as is the area a good area for the type of people they need to work within the offices and are the skills available? For example, Central London for offices with regards to banking, or Leeds, Birmingham and for computer skilled people Reading, Swindon or Milton Keynes but there are more location specific things that make an office location primary, i.e. being close to rail links so that your staff can come arrive in the morning on time, the area having a good road system, again so the staff can come in and having basic things such as good data / communication services will make the location into a primary location.

In our experience also the quality of the office; whether it has the latest specifications for offices is also a major factor in it being a primary office location.

Secondary and tertiary office markets tend to be the older style office which a non-corporate company would not use as the office says a lot about them as a company. The secondary market tends to be smaller companies or companies which already have a good head quarters trophy office, and both the primary and secondary market tend to have specific office built buildings, whereas the tertiary market tends to not only be in a less desirable area it could also be converted buildings of one type or another.

It's all about borrowing

It's interesting to see how primary, secondary and tertiary property locations link to the quality of the covenant, which is the quality of the ability of the occupier to pay the rent and bills. You could argue that this in turn relates to how the major banks and building societies and lenders consider companies and their confidence in them, which in turn would be reflected in money they will invest with them or lend them

How the primary, secondary and tertiary markets affect you and me

We also see how the mortgage companies look at you and me as a prospect (that's the prospect of being a future customer). A primary customer would be able to use a primary company such as one that's on the high street in a primary location! For example: Lloyds TSB, Barclays, National Westminster and HSBC, or the ex-building societies / modern banks, such as the Halifax, Bradford & Bingley, and the Nationwide. All of these companies tend to have a strong national presence and they are looking for strong credentials from you to lend to you.

Secondary and tertiary lending

You would be surprised how many people fall into the secondary and tertiary lending criteria. They can be people:

1. That can't prove their income, such as the many self-employed people.

2. Previous difficulties with money, such as a CCJ (Count Court Judgment). These will tend to go to the tertiary lenders, many of which you won't have heard of unless you've actually been in the mortgage market and had to go for this sort of tertiary lending. It normally takes a good mortgage broker to know the market and find the ones that are best for you or for you to spend hours on the Internet.

Tertiary lending could be described as high risk and as such the tertiary companies want higher rewards. Ironically, many times these tertiary companies are subsidiaries of the primary companies such as the ones mentioned and if they don't have a tertiary company they will certainly have a secondary lending company.

The aims of these tertiary and secondary companies are to not tarnish the brand names of the main high street companies.

Secondary lending

A secondary client or prospect is likely to be someone who is self-employed with accounts, possibly someone with a damaged credit card record. You can check these by having a look with experian.co.uk, equifax.co.uk or checkmyfile.com. We are sure if there are any others they will be on moneysavingexpert.com

So, as a secondary prospect you would deal with such companies such as IF, or to give them their full name Independent Finance, which interestingly is a subsidiary of the Halifax, which in turn is a subsidiary of HBOS plc, and as you can see there is a lot of brand protection here.

Smaller building societies

Other companies that operate in the secondary and tertiary markets could be identified as small building societies. Some of the building societies that exist at the time of writing this article are:

Bath Investment and Building Society

Beverley Building Society

Bristol & West

Buckinghamshire Building Society

Cambridge Building Society

Century Building Society

Chorley and District Building Society

Coventry Building Society

Darlington Building Society

Ecology Building Society

Harpenden Building Society

Ipswich Building Society

Leeds Building Society

Leek United Building Society

Manchester Building Society

Melton Mowbray Building Society

Monmouthshire Building Society

Newbury Building Society

Norwich & Peterborough Building Society

Nottingham Building Society

Penrith Building Society

Progressive Building Society

Skipton Building Society

Swansea Building Society

Tipton and Coseley Building Society

West Bromwich Building Society

Yorkshire Building Society

These will tend to look at more local markets and until recently we believed that they would also look at you more along the lines of the old Dad's Army Captain Mainwaring type bank manager where they looked at you specifically and weren't simply doing a number crunching and tick boxing exercise. However, we are advised that this isn't necessarily the case.

Other articles that you may be interested in:

Commercial Surveys

Compare our Commercial Surveys

Information on Dilapidations

If you would like to talk to a chartered surveyor about investing in a commercial property, or even the surveys that can be carried out on your home, please do not hesitate to contact us on free phone 0800 298 5424 for a friendly chat.

Please note we are independent chartered surveyors and as such we give an independent view. We are not owned in any way whatsoever by banks, building societies or other mortgage lenders.

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