If you've invested in a commercial property, but are having a hard time finding or keeping tenants, investing in upgrades can improve both their intrinsic value and their value as perceived by potential renters. Putting some money and effort into your commercial property can significantly increase your overall return on investment, but how do you know what to upgrade?
This guide can point you in the right direction to get the most positive impact for every dollar you spend.
Start by looking around with the eye of a prospective tenant seeing the space for the first time. It's worth your while to make property aesthetically strong. You can make any or all of these changes for a relatively modest cost.
Consider changing the flooring, as new floors can provide an excellent impression during property walkthroughs. You can choose from many different flooring options to uplift the look and feel of the place.
You can also paint the exterior and interior: A fresh coat of paint makes everything brighter and cheerier. Try for a neutral shade, and pick blue or red undertones depending on what sun exposure the space gets. Avoid strongly coloured paint on the walls and ceiling, as you need to keep the palette muted so that prospective new tenants can visualise themselves in the space.
Another small amendment you can take advantage of to renovate the property is identifying wasted space and figuring out how to utilise it. This might mean taking out a smaller, non-load-bearing wall to cerate a single larger space.
If the space has a lavatory, make sure it's well appointed and modernised. A clean, new-looking water closet can go a long way toward making a tenant feel comfortable in a leased space.
If you can obtain the required permits and permissions to tear down a dilapidated building and start from scratch, this may be the best approach for a seriously run down commercial property. A good example is if you purchased an old warehouse. Assuming the zoning is right, you could turn that footprint into offices or retail space. A brand-new building in the right location can attract quality tenants and generate long-term revenues.
Upgrading a building to take advantage of high-tech options can increase its attractiveness. Consider updating electrical and HVAC systems with smart devices to reduce power usage, or improving the building's Wi-Fi and adding cybersecurity tools .
If the building is large and mixed use, consider vending machines, charging stations, lounges, outdoor seating, children's playgrounds, a dog park, and other additions to make the space more useful or comfortable.
In some instances it might even be worth partnering with a small company to add even more to your commercial property. Consider a small cafe on the ground floor, or a laundry service that does pick-up and delivery. Having these needs serviced on-site can make your building extremely popular.
You might want to lower rents slightly to attract tenants, but you'll need to make sure your contract is written in such a way as to allow for increases in the future, and try to get longer lease terms when possible. A 5- or 10-year lease can be a boon at the right rates, but cripple your future earnings if you get locked in at too low a monthly fee.
These upgrades are all extremely easy ways to increase the value of your commercial property. You can also hire a property appraiser or valuer to review your commercial property and help you find the correct range to charge for letting the space. The goal is to have a commercial property that stays occupied and bringing in enough revenue to not only pay the loan, but turn a profit.
Need help with your commercial property? Contact Ray White Commercial Gold Coast for help today.