Maximising Rental Property Returns: Proven Strategies
Step into the future and maximise your commercial property assets
With good management your commercial property portfolio should be providing solid returns, but there are always opportunities to improve both the value of your assets and the income they generate.
Are you happy with your current return on investment?
Commercial property can be a wonderful investment, especially if you have confidence in your property manager. Property and land values continue to grow over time as do rentals. If you are looking for a solid long term or inter-generational investment, you should strongly consider commercial property as part of your investment portfolio.
Perhaps you are happy with your current rate of return, but have you considered that there may be untapped resources or opportunities within your portfolio?
There are property consultants based in Auckland that can help identify and maximise the returns and value of your commercial property.
CP Pro Tip: Visit your commercial properties and other properties in your area regularly to identify any opportunities to maximise your rental property income.
Modern and renovated spaces are always in demand
How to Increase your Rental Property Value and Return on Investment
Cost Effective Strategies
There are some simple and cost-effective ways to increase your property value. Here are a few of my favourite “cheap and cheerful” strategies to maximise your commercial portfolio’s value and ROI.
Provide Exceptional Property Management
The management of your property is so important to attracting and retaining quality tenants. Exceptional property management means taking care of your tenants, presenting your property to the highest standard, quickly dealing with operational or tenant issues, and planning your leasing strategy to minimise vacancies and provide a good mix of businesses for optimal success. An exceptional manager will also provide careful outgoings budgeting. If outgoings costs for your commercial property are high compared with market costs, it will effect how much rental you can charge. When leasing premises, tenants will consider the total occupancy cost, not just the rental rates.
Understand Changing Trends
Commercial leasing trends are affected by many external factors, including the economy, environment, market trends, (like online stores v bricks and mortar), government and many other factors. One issue currently facing businesses is their environmental impact. This is especially apparent in the public sector. When the Carbon Neutral Government Programme (CNGP) comes into effect in 2025 there will be an extra level of compliance for these businesses. If you have an environmental policy for your commercial properties, this will help attract and retain those businesses that are concerned with their environmental performance. Another simple thing you can do is offer bike parking to encourage people to cycle to work, or EV charging stations.
Maximise Rentals
Carry out rent reviews on time, charge market rates for extras like parking and signage. If you have areas that cannot be used for base rent, they can be converted to storage.
Signage and Billboards
Electronic billboards can create a huge amount of revenue and add value to your property. Generally the billboard company pays for the installation and all operating costs, and pay the landlord a good rental. Signage rights should also be rentalised. Within reason, good quality signage on your property can add to the street appeal, but be careful to ensure the quality and overall aesthetic is maintained.
Provide High Tech Spaces and Amenities
When you are developing or improving a site, think of what sort of amenities might appeal to your prospective tenants. I recently visited an office building that not only had a dedicated bike park with racks, but also a changing room with a shower and a bike maintenance stand with a pump. These little extras can add a lot of appeal to your property and increase the demand and rental rates you can charge.
Pod buildings can add rental to previously unrentable areas
Strategies that Require Significant Investment - Development, Renovation, or Extension
Use Extra Land
I have a client that purchased a commercial building 10 years ago. The property had a small strip of adjacent land that he brought for a minimal sum, (around $100,000) because it was no use to the vendor. My client then had a modern 3 story building designed that would fit on the land, built it, and now it is a specialist medical facility that returns an excellent rental and is worth twenty times what he paid for the land. Your property may have excess parking that could house a retail pod. Existing buildings could be extended, or courtyards or decks could be converted into rentable space.
Active Edges
Supermarkets are wonderful tenants but they do not pay retail rents. If you have a supermarket, you may be able to activate the edges of the property by leasing small, street facing units to retail, café or takeaway operators. The retailers benefit from the foot traffic and the supermarket customers benefit from being able to grab a coffee or a pick up a prescription after they do their weekly shop. Light industrial sites can also do the same with retail at the street front.
Redevelopment
Auckland’s zoning changes have provided opportunities for Landlords to redevelop their properties to significantly increase value and ROI’s. Your industrial site may be able to be converted into retail for example. There is also a large demand for medical facilities in Auckland so there may be opportunities for you to include a medical use in your property.
These options can involve a significant investment but can result in exponential growth in the value of your assets and are worth considering when market conditions allow.
If you would like to discuss how you can maximise the value and returns from your commercial portfolio, email me today. CPP offers consultancy services to help you achieve the best results from your commercial investments. I look forward to hearing from you!
Regards,
Kirstin
