Are you a local landlord looking to increase your property’s value? When evaluating your portfolio, it’s common sense to want to optimize your investment in order to increase rental rates, keep well-performing current tenants and maximize the overall value of the center. As a full service commercial real estate firm, we often evaluate a property’s current and potential value-add opportunities.
It’s important to keep value in mind regardless of whether you’re looking to hold or sell. We’ve shared a few tips on how to increase real estate value not only for our clients, but for our own investments as well.
One of the most significant ways to drive value is through occupancy. A center with more tenants, and less vacancy, can charge higher rental rates and sell for a higher price. If you’re working with a broker, you’re relieved of this responsibility, but if you’re looking to fill a center on your own, there are a few steps you can take.
First, you’ll want to make sure your property is adequately advertised. You can do this with eye-catching signage, by listing the property on your own website and by advertising through various commercial real estate listing services like CREXi and LoopNet. Giving clear direction of who to contact is also important when advertising a property. Adding a contact number to available space signage is a great way to be sure not to miss out on a new local tenant.
You’ll also want to make sure your property is attractive to potential tenants. Clean out old, dusty spaces and keep your property up to date. We’ll talk more on this below.
You can check with your current tenants to see who may need more space, or to see if they have anyone they can refer. Oftentimes, the best new tenants come from reputable current ones.
Put Your Money Where It Matters Most
Keep Current Tenants Happy
Once you’ve found quality tenants, you want to keep them satisfied. Not only are tenants your biggest promoter and your direct line the community, they also can be your largest expense. If you lose a quality, paying tenant, you’ll not only lose rent, but you also may lose traffic and costs associated with putting in a new store.
Complete Necessary Repairs
Similar to keeping tenant happy with consistent communication and clear instruction, keeping the property well-maintained will also help keep people happy. You’ll be able to attract more potential tenants with a well-lit, clean, up to date building versus a dilapidated one.
Think about it this way, if center ABC across the street has reputable property management, clean facilities and a white boxed space, a tenant will likely pick that location over an out of date, dirty, but cheaper property. For local tenants, their storefronts are their dream made concrete. Make sure your property helps them reflect that.
Hire a Property Management Firm
While you can certainly handle tenant communications and necessary repairs on your own, bringing in a property management firm gives your tenants a dedicated team they have access to 24/7. This not only saves you time and headache, but it also makes your tenants feel taken care of. A solid property management company will be able to run the day to day operations of your property, frequently check in on tenants and the property and can quickly handle any issues that arise. They’ll also handle rent collections and other financials, meaning you no longer have to be the “bad guy.” While there’s not a direct correlation to property management firms and asset valuations, we think the streamlined communication and organization does affect tenant retention.
As an owner, you may recognize that some spaces are harder to fill than others. In real estate we often find that the “elbow,” or the innermost part of a retail center, is the hardest to fill. Commercial real estate brokers are able to visualize layout options that you may not have realized were possible. They know how to shift tenants, move walls and carve out spaces to make the most sense for a property.
Take Heartland Crossing Shopping Center, for example. Senior Broker, Zach Slagle, brought in two national tenants and relocated two other long-term tenants. This move allowed Anytime Fitness to occupy 6,075 SF, and AT&T to take a 1,100 SF outlot space, making the center, 100% leased. Not only did Slagle bring the landlord two credible tenants while keeping current tenants happy, he also increased the property’s value.
Overall, increasing commercial real estate value comes down to putting your property and tenants’ needs first. By attracting new tenants, keeping your property well-maintained and opting for timely upgrades, you’ll be able to drive value in your current real estate offerings.