5 Ways to Increase the Value of Your Commercial Property: Part I
Written by: Mathew Laborde, CCIM
If you own or manage a commercial property, or if you are considering purchasing commercial real estate, you should know that there are a number of things you can do to increase the value of your property. To be more specific, there are several things you can do to increase your cash flow and decrease your expenses, thereby increasing the overall value of your commercial real estate.
To get right to the point, let’s take a look at 6 ways to increase the value of your commercial property…
1. Increase your tenants’ rent
This one seems like a no brainer, but it is one of the easiest and fastest ways to increase your cash flow. Increasing the rent your tenants pay can have a tremendous impact on the overall value of your property. To start, you’ll need to do some research of your local market. In order to keep your building occupied, you’ll need to make sure that you’re asking a fair value market.
Keep in mind that it’s incredibly important that you don’t price yourself out of the market — this is a surefire way to lose tenants (and therefore, money). However, if you still have some room to grow and are able to increase the asking price for your space, the overall value of your property will increase accordingly.
2. Make strategic improvements and renovations
These types of improvements to your property can be surface cosmetic improvements, or substantial structure rehabilitation. Take a step back and really look at your space — or, better yet, bring in an experienced and neutral third party to assess the space for you. Aesthetic improvements, such as a fresh coat of paint on an older metal warehouse, new decor elements in the common areas of a large office building, or new flooring can go a long way in sprucing up your building.
New or updated landscaping of the grounds is a great way to attract new potential clients through your doors. And structural improvements or major renovations, such as refinishing your retail strip center’s facade or bringing a dated space in line with modern amenities and finishes can be the deciding factor in signing a new tenant. Keep in mind that the key word here is “strategic” — it’s important to make smart renovations that will deliver a smart return on your investment.
3. Minimize your expenses
In addition to bringing in more revenue, another strategy to increase the overall value of your property is to cut down on your expenses. Fortunately, there are loads of ways that you can do this. First, gather statements of all of your historical operating expenses. Are there areas where you could cut back or consolidate, or even cut out completely? Think outside of the box here — a solution could be as simple as switching to LED lightbulbs or installing solar panels to cut down on your utilities expenses.
4. Change up the purpose of the building
Another way to drastically increase the value of your property is to consider repurposing the space, or using the building for a purpose other than what it was originally intended. For instance, imagine a large industrial warehouse in the heart of downtown. While this type of building is fine to have in your portfolio, imagine what the worth could be if you converted the space to an artsy hotel or trendy condos. Of course, a conversion project such as this is a massive undertaking (of both time and money), but it can pay off big time in the end.
5. Maximize your marketing to cut down on vacancies
Even if you’ve updated your building with all of the latest eco-friendly features, and your space is offered at a fair but profitable rate, your building will automatically be worth significantly less with vacancies. After all, one of the easiest ways to lose money in commercial real estate is through vacancies and lost tenants. Utilize smart and cost efficient marketing strategies to help reach your target market — and improve your bottom line.
While it may seem like an overwhelming task, all in all, there are several strategies that can be easily implemented to help increase the overall value of your property. And, if you have any questions, we are here to help. Our team excels at representing tenants, landlords, sellers and buyers by aggressively pursuing and protecting their best interests. View our featured listings or contact us to get started today!