Here’s How You Can Increase the Value of Your Commercial Real Estate in NJ
Have you invested in or are thinking about purchasing commercial real estate in NJ?
Whether you’re looking to diversify your portfolio or build wealth over the long haul, the pay-off from real estate investment makes it worthwhile. That being said, buying the right property through expert real estate advisors like Blau & Berg is the first step towards a profitable venture.
Besides providing an alternative source of income and ongoing cashflow, being a commercial property owner can also allow you to access tax benefits. Other advantages of real estate include appreciation over time and the ability to control one’s financial future.
However, as viable as commercial properties are in terms of long-term investment, you won’t get the needed result if you don’t put measures in place to make them sustainable, income-generating assets. It is, therefore, essential to have an idea of things you can do to enhance and improve the value of your investment.
Since a commercial real estate’s value is based on the revenue it generates, you should take an approach that will enable you to decrease your expenses while increasing your overall equity.
The following tips will show you how to make the most of your commercial real estate in NJ.
Make Improvements to the Property
One of the easiest ways to increase property value is by making sure your property is in the best shape possible. This is not only beneficial for your tenants; you’re your portfolio as well. Improvement of your property can include total upgrades or cosmetic changes. Extensive renovation involves structural improvements, such as changing the architectural facade of an apartment or redoing all the rental space in a mall. Cosmetic improvements would include new landscaping, new décor, new carpeting or flooring, or new wallpaper or paint. Other cosmetic changes include improving the lobby or repaving the parking lot.
Cosmetics improvements can be a game-changer for commercial properties, increasing the demand, and consequently, the value of the property. As such, property owners that can offer the tenants what they’re looking for stand a chance of increasing their asking price.
Introduce Energy Efficient Lighting
Do you want to save on electricity while arousing the interest of potential tenants for your property? Consider upgrading to energy-efficient lighting to your commercial real estate in NJ. Energy conservation has become a hot topic and major selling point of real estate in recent times. Therefore, using LED bulbs is one of the easiest ways to improve your asset’s bottom line. According to Forbes, commercial real estate owners have discovered that smart energy use is not only beneficial for the society and the planet; it can also boost their real estate portfolio’s worth. Other benefits of smart lighting include:
- Making your property more attractive to clients
- Saving energy
- Reducing operating and maintenance costs
- Saving your renters from paying higher rental bills
Therefore, it is essential to address energy efficiency in your commercial property. Also, renters are more aware of carbon emission and would, therefore, appreciate the eco-friendly environment enabled by your commercial property.
Ensure You’re Charging Standard Industry Rates
Another way to increase the overall value of your commercial real estate is to increase rent prices. Review the historical data of the property to verify if tenants are paying a fair market rate or it is possible to markup rents. You can also review the market trend or search online for average rent rates. If there’s inconsistency with the current lease or there is room for markups, consult a broker to help you negotiate the contract for a new tenant. You can also increase your rents for an existing tenant who has occupied the space for several years.
If you have recently made improvements to the building, determine whether the recent enhancements can justify the augmentation in the value. However, avoid pricing yourself out of the market by charging too high a rent. Pay close attention to what renters are being charged for similar types of rental property in the locality.
Add Amenities to Boost Returns
While fixing up the general interior or exterior may add value to your property, it may not be enough. Consider adding amenities like concierge services, a fitness center, automated laundry machines, or a conference room. You can also carry out high-end remodels that let you charge a premium.
Other great ideas include adding free wireless Internet for your tenants or creating a family playground in a multifamily property. If it’s an office building, a daycare center could be a game-changer. How about an outdoor courtyard in a hotel property? The list is endless. Do some research to get an idea of what would be the most suitable.
These value-enhancing upgrades are not only useful for your tenants, but they can also serve as income-producing ideas. For instance, you can rent out the roof space or common room for events. Moreover, providing your tenants with amenities will make your property more appealing and valuable.
Change the Property’s Intended Usage
When purchasing or leasing commercial real estate, you will sometimes find a property that was previously used as something different than what you want to use it for. For instance, you find commercial real estate in NJ used by a beverage distribution company. You can apply for a zoning permit that lets you convert the warehouse to an office building or any other commercial use that makes sense for that location.
Altering the use of commercial real estate property can drastically change the value of the property. Although this may require a significant amount of money, it’s worth the investment if properly planned. However, you should find out if you need to obtain planning permission before commencing renovation work on the premises.
Car Parking Matters
Besides adding a few amenities like those mentioned earlier, an underrated yet essential facility that could transform a commercial property is a parking lot. This amenity matters to businesses as customer comfort is their priority and plays a significant role in retail properties. Whether a few more street spots or larger parking lot, a little more goes a long way.
Convenient parking puts your property ahead of others in the same location while keeping commercial tenants happy. For instance, when visiting a store, customers need comfort, ease, and convenience. They want to find parking lots easily, and being able to do this enables them to enjoy their shopping experience. As these factors can indirectly affect property values, buyers should look out for properties with adequate parking.
The available parking should be structured in a way that drivers can easily understand traffic flow. Experts suggest that retail properties should ideally have sheltered parking to protect visitors from the weather. The location is also essential. Is it near the office entrance?
Have you considered installing sub-metering in the building? If you’re paying for electricity, gas usage, water usage, measures should be put in place to accurately determine each tenant’s utility consumption. Adding your tenant’s bills to their utility usage can help prevent you from paying an excess.
And unlike dividing the cumulative utility bill between tenants, prospective lessees will only pay for their fair share of the bill. They will also be able to manage their utility instead of the entire building. This arrangement should allow them to have their gas meters, water meters, and electricity meters. Meeting tenants’ expectations will increase the chances of increasing your property’s value and making more money per unit.
Keep Up With Market News
Equipping yourself with the knowledge of how investment in commercial real estate generates profit is essential. Potential investors have to stay abreast of market trends and strategies by researching online. Adequate information on real estate can enable buyers to not only get it right when buying but to also get higher revenue from commercial lands and buildings.
Moreover, while online valuation sites and comparables can provide an indicator of your property’s worth, there are other variables to consider when it comes to valuing your property, the most important being how much your next tenant or buyer wants to pay. No matter what you believe, the worth of the property is, potential tenants or buyers are going to determine the real value. The onus, therefore, lies on you to increase the value of your property.
Ready to Take the Value of Your Property to the Next Level?
Adding value to a commercial real estate in NJ doesn’t have to depend on complicated investment theories. Little changes here and there can go a long way. All it takes to enhance the worth of your investment property is a lot of creative ideas—like those shared in this piece. Your approach should be one that lets you maximize current revenue streams, find new sources of revenue, and decrease costs.
You may be looking to invest in real estate to diversify your income, improve your investment portfolio, or for tax benefits. No matter your motivation, the main goal is to improve the Net Operating Income (NOI), and choosing the right property is the first step in this process. Contact Blau & Berg, your expert property realtors for real estate investment. Whether you intend purchasing a vacant commercial property or one that already has lessees, every investor wants a good return on their investment.