If you are seeking to raise the value of your commercial property investment, then there are four major ways that you can approach it. The first entails improvement of the investment property itself. The second depends upon increasing its returns. The next entails adding amenities and the fourth focuses on the usage of the property.
Commercial real estate is commonly regarded as a long-term, and often much costlier investment in comparison to residential, real estate, retail and industrial premises. An example of a commercial real estate property could be an office tower or building, a shopping centre, or a set of buildings intended for business purpose tenants. If you can find the right tenant and maintain a positive relationship, you can make a substantial profit long-term.
Let’s look at four methods for raising a commercial property’s worth in detail.
1. Enhance the Property
If you are purchasing a commercial property, consider a building that would benefit from some additional construction and renovation. A professional refurbishment can significantly increase the value of the property.
If the lease is short-term, the current tenants can remain while you renovate. You then renegotiate the enhanced property on a greater rental rate to accurately represent the increased value and cover labour costs of construction.
Even if you have owned the property for a long time, you should always be seeking to make improvements for the long term. Minor renovations include the installation of ducted heating systems, floorboard maintenance and carpet, painting, as well as landscaping.
Major works such as structural improvements require a team of certified contractors, and also means that if you have current tenants, they can’t be present due to safety reasons. This will be expensive, but the rewards can be profound. If you can provide a positive, modern, and team-driven work environment, then the tenants will find their investment justified.
2. Boost your property yields
You need to have a thorough and in-depth understanding of the rental rates in your area. This is so you don’t undervalue your property, or excessively inflate it. Seek professional property valuation and advice to accurately understand what your property is worth. If you are priced too high, you may struggle to find any tenant, and you’ll have zero income.
When purchasing a commercial property investment, consider searching for properties in an area with lower rental prices. This means avoiding areas like a CBD. As a result, you get an immediate increase in property value simply by bringing it into line with current and achievable market rents.
3. Add Conveniences to the House
There are a variety of methods to enhance the amenity of your own commercial investment. Start looking for electronic methods to improve your property, like offering free Wi-Fi to retail tenants or installing an electronic security system. Include some trendy low maintenance botany on the balcony, some seats at the entrance, or even a table tennis table to improve work culture. A large property could even have a small childcare room or dog playroom.
4. Change the Use of the Building
Wise commercial traders are constantly on the watch for rezoning chances. If you own a run-down warehouse in an expensive and gentrified area, you’ve got the perfect chance to turn it into a stylish restaurant, store or office. This will provide an immediate lift in worth.
Finding it difficult to find tenants to your building? Consider altering the tenancy mix, attract small businesses and secure multiple smaller tenants. Increased cash flow and greater occupancy rate can make a large difference for your bottom line, additionally raising the market value of your commercial property. It’s easier to replace a smaller business than finding one large business.
If you’re short on time and do not want the stress of managing a property, then speak with a commercial property manager that can handle tenants, location, and general improvement.