Last edited 14 Jan 2020

Making commercial property more efficient

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Contents

[edit] Increase net lettable space

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.

[edit] 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.

[edit] Lease spaces

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.

[edit] Adjust to decrease operating expenses

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.

[edit] Maintenance

Deferring maintenance will only save money in the short term. Unplanned repairs, due to a lack of maintenance, will ultimately cost more.

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.

[edit] Rental levels

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.

[edit] Review agents

Is your letting agent performing satisfactorily? A change, as well as resulting in direct savings, can provide fresh ideas, leading to efficiencies elsewhere.

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.

[edit] Find new tenants

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.

[edit] Energy efficiency

[edit] Heating and air conditioning:

[edit] Thermal elements:

[edit] Lighting

[edit] Other strategies

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.

[edit] About this article

This article was written by Trident Building Consultancy and uploaded in January 2020.

[edit] Related articles on Designing Buildings Wiki

--Trident Building Consultancy