[fa icon="calendar"] 02.07.2017 / by Hunter Strickland
There are many ways you can increase the value of your commercial real estate. By looking at the property’s potential, as well as the historical data, it is easy to identify areas for improvement. Here are a few suggestions for how you can increase commercial property value in central Florida:
1. Make Improvements
The first step toward increasing property value is to make improvements to the property. This could include cosmetic or structural changes, or both. Whatever you decide to do, the goal should be making sure your property is in the best possible shape.
For commercial properties, making cosmetic improvements can be a game changer. Improve the lobby, repave the parking lot or improve the landscaping to enhance property values.
2. Cut Costs
Increasing the property value won’t do you much good if the property is still bleeding you dry. Look for ways to cut operating expenses and reach maximum efficiency by examining historical data on the property as well as similar properties in the area.
There are ways to cut costs without actually affecting how the building operates. For example, perhaps you can reduce utility costs with energy-efficient light bulbs or submetering.
3. Increase Rent
Increasing rent prices can also increase the overall value of your commercial real estate. Review the historical data of the property to see if your tenants are paying a fair market rate of if there is room for mark ups. Look into consulting a broker because you may need to negotiate new rents based off the market when renewals or new leases come up.
Also look at what improvements can be made to justify these mark ups and be careful not to price yourself out of the market.
4. Add Amenities
Providing your tenants with amenities goes a long way in making your property more valuable and appealing. Consider adding things like:Concierge services A conference room A fitness center A cafe Vending machines
You might also consider other income-producing ideas such as renting out common areas for events or roof space for cell towers.
5. Change the Intended Usage
Sometimes, changing the use of a commercial building can have an effect on how it is valued. For example, purchasing an old industrial warehouse located in a high-traffic area and converting it into an office building or retail center can be a very profitable investment.
6. Get it Appraised
Get your property appraised and appeal the appraisal amount if it is too low. Hire a real estate lawyer with a specialty in tax appeals to help you through this process.
7. Improve Your Leases
A five year lease with rent increases is much more valuable to investors and lenders than a one year lease. Try to renegotiate terms with existing tenants and see if they would be willing to extend their lease in order to maximize the value of the property.
If you have a tenant that regularly makes requests that are not your obligation, it might be time to renegotiate and improve lease terms in your favor. Keep in mind that longer leases give you more of a cushion in paying commissions or having to fill the tenants space.
8. Hire a New Property Management Company
In some cases, you might just need to bring in some fresh ideas. Hiring a new property management company can bring a new energy or philosophy that adds value to the property. For example, they may have new ideas for increasing income, cutting costs or giving your property an updated look.
Improve Your Investment
Increasing commercial property value requires more than just looking at the historical data. Property owners need to see the full potential of their investment and think of creative solutions for reaching that potential. These are just a few suggestions for how you can improve your investment. Do you have any strategies of your own?