5 Ways to Get Your Commercial Real Estate Fit in the New Year
This is the time of year many of us make resolutions about personal and professional changes in our life; to start a new exercise routine, eat better, loose a few pounds, or maybe start writing the book we have dreamed about. I personally spent some time over Christmas thinking about the health of my business which got me thinking about what efficiencies I could bring to our office building to save money and to improve its long-term health. So, here is my 2021 Commercial Real Estate Health Challenge!
Let’s see if we can “tighten up” the envelope of your property, “increase” the occupancy levels with happier tenants (if you have them) and “decrease” your operating expenses. Does the theme sound familiar?
- Address deferred maintenance. There a many things that can be addressed here so lets focus on just one – water.
- Small roof leaks will always grow into larger more expensive problems and never make tenants happy. If you are a landlord fix these leaks now so you’re not negotiating about it down the line.
- Window trim left unpainted will eventually become rotten and require more costly replacement. What are you waiting for?
- Check downspouts. Make sure they are clear of leaves and debrief. Don’t let water pond and freeze on your roof.
- Are you walking past stained ceiling tiles everyday hoping they will go away?
- Operating expenses. Schedule your annual operating expense check-up. Tenants that pay pass through expenses should closely review what is sent to you and owners need to examine every expense, whether it is passed through to tenants or you pay for it. Nobody should be overpaying for anything, especially in these times. Review your ongoing contracts with vendors and have them rebid to ensure the best pricing for you or your tenants:
- Cleaning services
- Trash/recycling collection
- Elevator repair and maintenance
- Property management
- Wash your face. When was the last time you had the exterior of your building cleaned? Create a plan for regular cleaning or enhancement for the façade of your building. A well-maintained façade is more likely to attract customers into your business if you are a retailer. For everyone else it is your first chance to make a positive impression on customers or prospects. Just like plaque in your arteries, dirt left to accumulate is hard to get rid of later in your building’s life.
- Technology Upgrade. The industry known as PropTech or property technology has exploded in recent years, after decades of resistance to adopt new ways to manage and operate buildings. The commercial real estate industry is seeing its first wave of disruption of digital innovation from managing rent collection to monitoring utility usage. There are many simple apps or platforms for tenants to pay rent quicker and more painlessly which can save you time and money. In a year like 2020 where fewer people were coming into their offices, having the ability to monitor and adjust HVAC levels remotely could save significant energy and money. This is an area worth researching to make your building run more efficiently and to increase your net operating income.
- Insurance. Have you looked at your insurance policy lately? The levels of coverage you need very well might have changed since the last time you looked at it. If you have made significant improvements or additions, the replacement cost will have gone up, and if your insurance company doesn’t know this, and there is a catastrophic event, you might not be covered for the full cost to rebuild. Do you know if you have enough liability coverage for the current activities and tenants in building? Uses change over time and so should the coverages.
So how does your building’s health measure up? Starting the new year with these points in mind can help you, your tenants, and your customers. Invest now or pay later.
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