PROPERTY NEWS - A good starting point in assessing the value of your commercial property is to look at its profitability. There are several ways to increase the profitability of your building and thus add value.
“You can garner greater profits by increasing income or by reducing expenses,” says Leon Breytenbach, national manager of the Rawson Property Group’s commercial division. “Another method to add overall value,” he continues, “would be to make improvements to the actual premises.”
How to increase income
Synergy
Harmonise tenant mixes so that all of your tenants may operate at an optimal level. They need to be in a similar category in order to attract the most suitable clientele for each other and a good example of this is in a retail centre. “You would not place a tyre and brake outlet next to a high-end clothing store,” says Breytenbach, “instead you group similar stores together, allowing the clientele in each area to be drawn to more than one tenant, thus improving the success of all.”
How to increase income
Synergy
Harmonise tenant mixes so that all of your tenants may operate at an optimal level. They need to be in a similar category in order to attract the most suitable clientele for each other and a good example of this is in a retail centre. “You would not place a tyre and brake outlet next to a high-end clothing store,” says Breytenbach, “instead you group similar stores together, allowing the clientele in each area to be drawn to more than one tenant, thus improving the success of all.”
With a conducive tenant mix, the landlord would be entitled to ask a higher rental from the right tenant. It is not uncommon for some investors to purchase commercial buildings, which have tenant-mix disparities, with the sole purpose of fixing the imbalance, and so increasing the value of the investment.
Increase the space to let
“The total area of a commercial property in metres squared, compared with the total area available to rent out are very different,” says Breytenbach. This discrepancy can be excessive due to poor initial design or inefficient use of the rentable space, resulting in the overall area not being used to its full potential. It is worth reviewing the floor plan of your property to see if any space may be rendered tenant-worthy without too much upheaval.
Increase the space to let
“The total area of a commercial property in metres squared, compared with the total area available to rent out are very different,” says Breytenbach. This discrepancy can be excessive due to poor initial design or inefficient use of the rentable space, resulting in the overall area not being used to its full potential. It is worth reviewing the floor plan of your property to see if any space may be rendered tenant-worthy without too much upheaval.
