How to raise the value of commercial property, P.2
8/23/2012 | Real Estate Blog
In our previous post, we began looking at ways landlords can raise the value of commercial real estate. So far, we’ve mentioned raising rent, lowering operating expenses, upgrading the property, changing the use of the property. In addition to these possibilities, it is also possible to upgrade the physical structure of the property, such as adding services like a cleaning company, conference rooms, a fitness center, and so on.
Getting a reassessment of one’s tax bill is another good idea. Often, the tax assessor’s office uses inaccurate data when updating or calculating a properties tax liability, and a reassessment can result in a lower property tax payment. This is a good idea for properties in areas with declining property values and when the property has not been reassessed for several years.
Asking tenants to pay for additional services is another possibility. These include garbage, electricity, water, cable and other services. This is often easier to do with new tenants who aren’t used to having to pay for those expenses.
Because extra costs are incurred with every change of tenant, it is in the best interests of landlords to retain the same tenants as long as possible. One possibility is to renegotiate leases with tenants to get them to sign onto longer term leases. This not only gives the tenant rent security, but it gives the landlord the security of not having to release the space so frequently.
Bringing in new management is another idea for landlords, particularly when old management has lost its effectiveness in bringing in new tenants at higher rents.
Finally, landlords that own a larger parcel of vacant land zoned for residential use can often add value to the property by having it sub-divided into individual parcel lots for single family homes. This can often allow a landlord to charge more for the land, per parcel, that he or she could receive for it as a whole.
Owning and managing commercial real estate profitably can be a challenge, but these and similar strategies can help maximize one’s profits.
Source: Realty Biz News, “Ten Ways to Increase the Value of Commercial Real Estate,” Daniel Doran, August 15, 2012