Current commercial real estate trends suggest that commercial property values will increase drastically by 2022. One of the reasons for this exponential growth is the rise in commercial tenant improvement projects.
Here are some of the ways that you can renovate your commercial real estate holdings to increase return on investment (ROI), while also staying on budget.
Design and Build
One of the biggest drawbacks of renovating a commercial space can be the disconnect that often exists between the designers and builders of the renovation project. Have one firm design and build your commercial tenant improvement renovation project.
- Designing generally: empty commercial space represents a major liability. To minimize potentially empty commercial spaces, you'll need to make sure that your renovation is general enough to make the space useable for many potential tenants. General renovation improvements that increase the rental value of your commercial space include bathrooms, plumbing, heating/HVAC, flooring, and electrical. For instance, you might take a space built in the 1990s before the internet was a major force and drastically improve the electrical systems, outlet configuration, and the hardwiring needed for WiFi networks. This general remodeling will make sure the space is an acceptable canvas for many tenants to create a thriving business with.
- Building on a budget: since you're working with the same contractor to both build and design your commercial tenant improvement project, you can establish and monitor the renovation budget more accurately. For instance, you might negotiate the price of the design and/or building materials with an end date clause stipulating a reduction in overall cost if the project runs late. It's important to have your legal team vet any of these documents before you consider them binding or final.
Getting the biggest return on your renovation investments is sure to be one of your biggest goals. However, not all renovations yield the same return.
- Infrastructure: as buildings age, they need to be updated. For instance, including new roofing on your renovation project can greatly increase the return on your renovation investments. This is because potential buyers and/or tenants often don't want to improve parts of the commercial space that aren't localized to the individual units on the property.
- Curb Appeal: increase the visibility and presence of your commercial space can also increase your ROI. For instance, you might add a new marquee outside of your commercial property to garner more curb appeal for your renovated spaces.