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Last edited 05 Feb 2021
Making commercial property more efficient
There is a direct correlation between the amount of space and the revenue it delivers. But this only applies to usable space, so take time to review your space and consider how you could improve or reapportion it. Pay particular consideration to shared areas which do not deliver a direct income and identify whether, though providing a mezzanine floor or skylight, you can create additional lettable space.
 Consider change of use
Changes in policy have made change of use from commercial to residential use (and others) more simple to achieve, in many cases without the need for planning consent. Depending on the market, a change of use can substantially increase your returns. If you are struggling to attract commercial tenants, consult a property expert and consider the alternatives.
Consider whether currently under-utilised spaces have the potential to be used by other organisations: a meeting room or car parking spaces can have wide appeal; likewise, attractive outside spaces. With some creative thought and marketing, more unusual spaces could have substantial appeal.
Review outgoings for the past year and minimise them. If you do not already have energy meters for each tenant, consider how, for a minimal cost, you can pass the cost of energy use onto tenants when leases are renewed.
Analyse expenses on a per unit / cost-per-square-foot-basis and compare them with other similar properties, then aim to re-negotiate costs with suppliers. In some cases, it may be beneficial to negotiate longer-term contracts at more favourable rates.
Planned preventative maintenance (PPM) is a strategic approach based on a detailed understanding of a building’s lifecycle. PPM can substantially reduce large unexpected costs, emergency call-out charges and downtime during repair work and ensure that a building is maintained to a high standard, and therefore a high value.
Do you have a comprehensive understanding of equivalent market rentals? If not, the likelihood is that your tenants are overdue an increase at their next rent review. If your rents are low but realistic, consider whether changes in the local market provide the opportunity for you to modernise your facilities and increase rent levels.
Bear in mind that substantially increased rents could lead to you losing tenants. In a buoyant market, this could lead to a higher calibre, more credit-worthy tenant, but if handled wrongly (or combined with unfavourable economic circumstances) you could inadvertently decrease your occupancy rate.
Similarly, check the management company is providing the service expected from them. Poor facilities management may result in tenants defaulting on their service charges, so tackle any issues before they become a serious problem.
If your building is under-occupied, give some creative thought to (or seek advice on) how to find tenants. You could incentivise new tenants (perhaps with a discounted first month rental rate, a low deposit or a short-term lease) or incentivise existing tenants to refer new tenants. The latter may benefit occupier synergy, resulting in tenants remaining for longer.
- Upgrade boilers to more efficient models.
- Insulate hot-water cylinders.
- Reduce thermostat deadbands to prevent heating and cooling working simultaneously.
- Introduce individual room thermostats or thermostatic radiator valves.
- Instal heat-recovery units to allow for the transfer of thermal energy.
- Use high-performance mechanical systems.
- Upgrade insulation to roofs, floors and cavity walls.
- Retrofit external insulation / cladding to solid wall construction.
- Address draughts.
- Change to LED or compact fluorescent lamp (CFL) technology.
- Maximise the use of daylight, where necessary combined with passive solar shading, to reduce the need for air conditioning.
- Use dimming lighting controls and PIR systems to allow lighting levels to be adjusted in relation to external daylight.
 Other strategies
- Replace single-glazed windows with double- or triple-glazed.
- Introduce motion sensors and adjust timings on existing sensors.
- Introduce solar panels (both photovoltaic and solar thermal), biomass boilers, and air- or ground-source heat pumps.
- Measure and monitor data on energy savings and indoor air quality and evaluate its effectiveness.
Ensuring high levels of energy efficiency is not only a legal requirement, but satisfies a number of other objectives, including tenant satisfaction, and is one of the many ways in which landlords can make their buildings more lucrative.
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- Planned preventive maintenance.
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- Reliability centred maintenance.
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- Scheduled maintenance.
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