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Smart Capital Improvements to Increase Commercial Real Estate Value

Posted by Guest Writer on March 06, 2018 Leave a comment

A quick run down of property improvements that yield the best bang for the buck.

Untitled design (25)-1-828689-editedCommercial real estate owners understand that being proactive instead of reactive is the name of the game when it comes to protecting or increasing property value.

Those owners that put money back into their properties to maintain its marketability and improve its overall value tend to have happy, long-term tenants and great reputations.

That said, happy tenants and everyone liking you doesn’t guarantee strong value or cash flow. What makes the difference is knowing when and where to put your improvement dollars. In other words, it’s crucial to be proactive and smart, choosing capital improvements that give you the most bang for your buck.

Here are some smart capital improvements that are sure to increase your commercial real estate value:

Cosmetic Fixes

Not everything has to be a huge investment to yield value. Making cosmetic, easy fixes can often yield surprising results. Before jumping into a huge renovation project, tackle some of these quick and dirty improvements to your property:

  • Swap out old, inefficient lighting for LED lights to save on replacement costs and energy consumption
  • Put a fresh coat of paint on the walls
  • Update the exterior of the building with a fresh coat of paint or new signage
  • Update appliances in the kitchen space
  • Upgrade your doors or floors
  • Pave or repave your parking lot
  • Clean up the property landscaping

Larger, High-Value Projects

These improvements and upgrades will require significant planning and higher levels of investment but still will yield strong returns:

Roof Replacement

Upgrading your building’s roof is an often overlooked, high-value improvement. While your tenants might not feel the tangible benefits every day, you’ll be investing in proactive maintenance that will protect the overall value of your building.

Lobby Upgrades

Improve the front desk and reception area for your tenants. The entryway to the building creates the first impression of your building and their company. Putting some work and cash into creating a stronger first impression for current and future tenants can help improve the overall tenant experience and property value.

IT Upgrades

Investing in strong wifi and internet speed performance for your building is a smart and necessary investment back into your property. Regardless of what your tenants do on a daily basis, fast internet connections are imperative to performance and the end user experience. If your building has spotty connectivity and slow performance, hire an IT service firm to upgrade your system. It’s a worthwhile investment and is now a standard expectation for current and prospective tenants.

HVAC System Replacement

Don’t sit on your hands if your HVAC system is underperforming. Failure to maintain or replace this critical system will make your tenants unhappy and uncomfortable while raising your utility expenses. Don’t wait until your building occupancy starts to tank before investing budget dollars into a more energy efficient, reliable HVAC system.

HVAC performance is not just about heating and cooling; it also can impact indoor air quality and cause health issues among your tenants. Proactive maintenance is critical as is knowing when to make the investment to replace an inefficient system with a modern one; while the upfront costs could be substantial, the investment will pay for itself with energy bill savings and happier tenants.

Security and Energy Efficiency Upgrades

Installing or upgrading security features like cameras, closed circuit TVs, keycode entry and other measures will both improve the end user experience and increase the value of your property. You don’t have to go crazy, unless the environment or industry your building is in warrants extreme measures.

In addition, improving HVAC performance, using efficient lighting and technology, installing programmable thermostats and implementing energy usage policies for your building can all yield strong financial results. Energy Star estimates that commercial buildings have an energy waste rate of 30%.

There are many ways to improve your building’s value and the overall experience of its users. When it comes to reinvesting in building improvements, there are four key rules to follow:

  1. Start with the simple fixes
  2. Plan for major upgrades well in advance and save for them
  3. Don’t do everything at once
  4. Always keep the tenant experience in mind

Increasing your asset’s value and keeping the end user happy are inextricably linked facets of building ownership. If you have a plan and stick to it, keep value in mind and proactively maintain your property, you’ll be well on your way to preserving and improving the market value of your commercial property.

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Topics: Land and Lots Ashleigh's Fields Notes