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Most commercial real estate out there is not performing at its best level. While yours may be the exception, chances are it has room to improve and enhance its return to the owner. How do you improve the proforma and how long does it take to get your money back?
The first step is to identify the goals for the property. Will the owner occupy it themselves, is it a long term holding for tenants, or will it be renovated, filled up and then sold? The answer to these questions will help determine the strategy used and the solutions that are best for each property. In addition, ask what is the budget for the project and what is the schedule?
Following are the parts of a building and information that should be evaluated before buying or redeveloping a property to enhance the experience for the users:
- The Site
- Curb appeal, Parking, Entry, Signage, Landscaping, Wayfinding and Accessibility
- Building Exterior
- Entries, Roof, Windows and Siding
- Building Interior Common Areas
- Accessibility, Safety and Style
- Tenant Spaces and Lease Ability
- Review the tenant rollover schedule
- Review the vacant spaces. Are there any that need to be demolished back to shell to show their best assets, like views to the outside?
- BOMA Square Footage Analysis
- Is it possible that there is more square footage than is recorded?
- Were balconies included? BOMA 2017 may allow them to be included.
- Total Cost
- If Renovating: Review the existing benefits and construction budget to enhance.
- Is an Architect needed to do preliminary pricing plans to confirm an initial budget for construction?
- What will improve the income and lower the operating cost?
- Soft costs: Legal, Design, Marketing, etc.
- Schedule: To renovate or fill the building with tenants
The Northchase redevelopment in Raleigh is a great example of a commercial property that had to determine its best overall strategy. The property had been almost abandoned for four years and after many developers looked at the property, Principal and Tri Properties came together to redevelop it into a multi-tenant office park. The largest debate for the developers looking at the property was what to do with the large outdoor fountain. If the fountain were to remain, the main entries to the property needed to remain at the rear of the buildings. In the end, the owners decided it was an enhancement to the property and an amenity that not many buildings have with its access to the outdoors and seating for tenants to enjoy. Tenants like Merz Pharmaceuticals, Pointsource and Phillips Architecture strategically designed their break rooms around the fountain views and access. Now the building and complex, which only a year before sat dark and empty, glows with life. The plaza has become a water park where robust tenant parties have become a way of life. Bringing the property back to life helped fill most of 160,000 square feet of tenant space within two years.
In summary, don’t lose money by not knowing what your options are to improve your building’s financial value and performance. There are a lot of good designers out there that can show you ways to make more out of your buildings. The sooner you know, you start making your building perform better for you and/or your tenants.