Commercial Property Improvements
We have a current client that inherited commercial property from a family member. The long-time tenants had been paying rent set years ago and way below today’s market value. We worked with the owner to align rent when leases were up, re-sign tenants, and find new tenants where needed.
We also came up with a plan to funnel the additional cash flow into property improvements. How a property looks means more money in the future and increases property value which is great when you sell. It also helps retain tenants, which keeps everyone happy. But what do you need to consider with commercial property improvements? Here are five critical areas:
1. Infrastructure and System Improvements: Updating a property makes it easier to lease and maintain, but it also protects your investment. It’s important keep on top of aging systems, like plumbing, electrical, and roofs. I’ve put plenty of roofs on buildings, which is much better than getting up at 3 am dealing with a flooded mess. Building improvements not only take care of your tenants, but they also help keep them there.
2. Reduce Operating Costs: Keeping a property well maintained makes it easier to insure, and with insurance costs on the rise, owners want to do what they can to lower the cost but still provide adequate coverage. Upgrading to LED lighting is an easy way to save money, cuts waste, and free up maintenance staff. Look for rebates and automation systems for lighting and HVAC to save more money. Smart building systems can also notify you before small issues become large ones. Bottom line, you want to address deferred maintenance before issues become costly.
3. Space Efficiency Improvements: Flexible floor plans are a great way to appeal to potential tenants and also allow owners to maximize rentable square footage. Over the years, I’ve moved, removed, and built walls to make a space work for a tenant, yet always being conscious not to leave unrentable square footage. On the industrial side, sometimes efficiency means adding a dock or a drive to improve logistics.
4. Curb Appeal and Aesthetic Upgrades: Over the years, I’ve purchased and helped owners with ugly properties. Sometimes, it’s a matter of working with owners to clean a property up, and sometimes on the investment side, it’s about making improvements to reposition a property. Updates to common areas, boosting curb appeal, and improving landscaping makes a positive first impression to buyers, tenants, and customers. Properties that look good are more marketable. I’ve written several blogs on the importance of curb appeal. Here are just a few:
5. Building Evaluation: Set a plan to regularly review the condition of your building. One to two years works for most properties, while some properties may need every six months depending on their use. Newer buildings may only require every two to three years. Either way, you’ll appreciate being on top of things down the road.
Conclusion
Smart commercial property improvements aren’t just about aesthetic updates; they are a strategic investment in long-term asset value and cash flow. By proactively managing infrastructure, slashing operating costs, creating flexible spaces, and maintaining strong curb appeal, you protect your property from costly surprises while keeping high-quality tenants happy. Scheduled building evaluations keep your improvement plans aligned to needs and market-rate leasing to ensure your property works as hard for your bottom line as you do.
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Jeff Salzbrun is the founder and managing partner of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.
