Friday, April 22, 2016

#CRE Improvements that SELL!

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The ways in which you improve your commercial real estate will depend upon the way in which your commercial real estate is occupied.

Owner occupant. If your business is housed in a building you own, you may be willing to invest in several new offices for the employees that you soon will hire.

Tenant. Paying someone else rent on a building your business occupies? You may be reluctant to upgrade the power service to run that new lathe.

Owner investor. Rely upon the rent paid by a tenant on a building you own? You will carefully analyze how much additional rent you can achieve if you add a truck loading door.

As an owner occupant or an owner investor, the money you spend improving your commercial real estate today will determine how marketable your building will be once vacant. Akin to that new kitchen you add to your residence, certain improvements will make your commercial real estate more desirable. Like that garage you convert into a bedroom, however, some improvements to your commercial real estate will actually detract from the appeal.

In that spirit, what improvements are worth the money?

Adding loading. Without a doubt, loading doors sell! If you can figure out a way to provide a mix of grade level drive-in doors with doors that are suited for a big rig trailer, you are golden. The more the merrier when it comes to loading doors.

Increasing the power. Upgrading the power feed into an industrial building is expensive. Costly ducting, trenching and transformers are needed. If your operation uses a lot of power and you invest in an upgrade, your building will be infinitely more appealing.

Providing a secured outside yard area. Occupants pay for interior square footage and generally not for outside space. Therefore, if you can secure some outside yard area for storage, staging or parking, you have expanded your square footage offering at no cost to the occupant. Yard space will cause your building to be leased or sold much quicker.

What improvements will cause your building to lose its attraction to potential occupants?

Too much office space. Especially if the office space is upstairs mezzanine space, most occupants will steer clear - because the space can't be easily modified or removed. You see, most industrial occupants are more interested in production space where they can make and ship things. Office space takes away from production space. If the excess office space is coupled with insufficient parking for the employees - death wish.

Special purpose fixtures. Freezers, coolers, lab space, cranes in the warehouse, warehouse racking, storage mezzanines, all fall into the category of special purpose fixtures. In most cases, occupants take these with them when they move. Encourage this! Rarely, will any value come from these improvements. The reason is simple - seldom are these fixtures used in the same way, therefore they are a nuisance.

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