Adding value to a property helps set you apart from other retail centers, but how exactly can you maximize your business? There are multiple ways to boost your property and get the most out of your investment. Adding value can increase your net operating income and boost your asset in the long run.
Let’s explore some of the ways you can add value to your commercial property.
Making cosmetic improvements is a great way to quickly add value to your property because it shows that you care about the experience others get while spending time in the space you have created for them. Removing trash around the property, repainting, updating finishings, and providing free Wi-Fi are ways to help boost your business. Paying attention to small details can go a long way because it shows your tenants you care. Replacing your building signs to make them easier to see from the street can also add value by attracting more people who otherwise might not have been aware of your tenants. People appreciate those who take pride in their building appearance because it renews their interest.
Renovating your property is an investment that provides long-lasting added value. Updating bathrooms or making improvements to a courtyard are more labor-intensive, come at a greater financial cost, and take longer to complete, but last years and add longevity to your property. Modernization makes old spaces feel new again, which is exciting for a customer to experience. Renovations can increase traffic from old and new customers and help generate overall buzz. Target began renovating their retail stores after sales took a dive in 2016 and saw increased revenue in their brick and mortar stores. In 2019, Target celebrated its best year in sales since 2005. Renovating your retail space can boost business by creating a fresh new atmosphere for the retail experience.
Adding value to your property can be as simple as adjusting recurring expenses. Determine if there are areas where you can decrease your spending and save money long-term. Renegotiate service contracts for maintenance and landscaping. Conduct a property tax assessment to determine the value of your property and the amount of tax you should be paying. If it appears your property tax is too high, it can be challenged to get a lower rate. Look into reducing your energy bills by switching out light bulbs, making sure your HVAC system is running efficiently and adding insulation to your roof. Combining a few or more of these methods will help cut back expenses so you can plan to use your savings towards other projects.
Taking steps to increase your security measures can add value by protecting your assets from potential theft and liability. Making sure your property is well lit is one of the simplest security measures you can take as it prevents theft and other illegal activity. Installing cameras and alarm systems minimizes the financial risk you otherwise take on and off the clock and these added features could help lower insurance premiums. Some insurance providers will also offer installation discounts. Security cameras and alarms help prevent employee and customer theft, burglaries, and verify injury claims. Upgrading access control to your property can also add value by tracking who enters the property and at what time. Keyless entry systems for employees reduce the number of people who have keys to a property and permissions can be adjusted as needed. Hiring a third-party security company to patrol the grounds day and night helps prevent suspicious activity and promotes safety in your area. Overall, security installations can prove to be a wise investment as they will protect your property from unforeseen financial loss.
Increase Tenant Rent
Making necessary updates to your property should follow with increasing rent for tenants. When leases expire, consider raising rent, especially if you have made major updates to your property. The extra money acquired from monthly dues can create a budget where funds can be recycled back into a property. Your cap rate improves along with tenant credit, which can be helpful if you decide to sell your property. To know whether you should increase rent, you can search for “rent rates” online, by contacting a property manager, or leasing company. Nicer, newer properties typically cost more to rent because they are modernized and tend to attract more business. Having made the updates listed above increases your chances of keeping and gaining customers and can be justified reasoning for raising rent.
Find a Property Manager
Make sure you have a good property management team that is efficient and organized. Owning and operating a commercial property can take a lot of time to manage, especially if you have multiple tenants. Hiring a professional property manager can take some of the weight off your shoulders and save a lot of time. Management companies focus on your property’s needs and help increase its efficiency by addressing issues in a timely manner. Each tenant will have different needs and balancing their priorities could set you back on other projects if you decide to handle all the work by yourself. Property managers can also help reduce the risk of legal errors that could result in financial loss. A good property manager should be well educated and provide your property with a resource of suppliers and maintenance workers that will contribute to the overall well-being of your property. The added value in hiring a property manager is increased tenant satisfaction and reduced risk of costly errors.
Increase Occupancy Rate
Increased occupancy shows your property is a desirable place to do business. If your property is leased at full capacity, you can charge higher rent, create a waitlist of potential tenants who might want to move in, and increase your chances of customer traffic. When leasing space, consider who will become your next tenant. Allowing well-known businesses to lease part of your property can greatly increase its value by attracting loyal customers in the surrounding area. Lease your space to a variety of tenants who offer different services and goods. This can turn your property into a one-stop destination for customers and increase your property’s value through your tenants.
Commercial properties are, in a sense, living, breathing vessels that require maintenance and updates. A property left unattended can quickly rack up a laundry list of maintenance and depreciate in value. Making sure your property is being cared for and updated accordingly will help establish a long-lasting investment.
Marc Altieri >
Vice President of Leasing & Investments
Marc Altieri started at SimonCRE in 2021 as the Vice President of Leasing and Investments and is responsible for communications with tenants throughout the development process, coordination with brokers and buyers, and ensuring comprehensive due diligence leads to timely and accurate transactions.