How to Make Your Office Building Profitable
Commercial property and office occupancy news was bleak through the COVID-19 years, and while the broader market’s recovery hasn’t been broad-based, there are bright spots. With increased return-to-office plans and creative new use cases for commercial buildings, owners and investors have a renewed impetus to make their spaces desirable, sustainable, and profitable.
In Traverse City, commercial property valuations were largely resilient, and new construction picked up well before other small-sized metros and even some of the largest office markets in the US. These are just a few of the tactics business owners and investors used to grow their businesses in the face of significant challenges.
Maintaining an Attractive Office Building for Tenants
Among commercial rental and lease properties, offices offer the potential for high returns, as well as unique hurdles.
Low-friction. Unlike equipment-focused manufacturing and industrial buildings, office tenants are relatively mobile. Aside from technology equipment and furnishings, most businesses can exit leases with little investment and very little lead time. This makes building positive relationships with tenants vital.
Variable. Especially during economic downturns, office tenants often reduce headcount and, in doing so, require less office space. Building owners willing to adapt to changing needs, often with the help of an experienced commercial contractor, tend to face lower vacancy rates over time.
Productive. Every element of an office space contributes to or distracts from productivity. From incorporating natural light to creating modular workspaces, well-designed buildings prioritize productivity.
Affordable. There’s a difference between increasing lease or rental rates and optimizing. Beyond square footage and location, energy efficiency, LEED certification, and other potential cost savings add real value to owners and tenants alike and should play a role in setting rental prices.
Three Ways to Increase Office Building Profitability
The most attractive commercial properties in Traverse City or any market combine location, strategic enhancements, and a competitive price for both investors and renters; a good deal is a good deal for everyone.
These property enhancements make the building more valuable to owners and more attractive to potential leasees.
1. Renovation and updates.
Look at office design trends, changing workplace demands, and other amenities that offer a return on investment. For example, the open-plan office is less attractive in the age of hybrid work and video conferencing, presenting an opportunity for renovations. Other enhancements, like on-site EV charging stations, provide a degree of future-proofing that prospective tenants appreciate.
2. Lower energy costs.
Lighting, heating, and cooling represent the largest operating expenditures for most office buildings. On average, here’s how these expenses break down:
Heating: 30%-32% of total energy use per year
Cooling and ventilation: 2%-35%
Lighting: 10%-17%
Investing in a commercial energy audit and implementing cost-effective upgrades can significantly reduce energy waste, unlocking capital for renovations or other investments.
3. Diversify your income.
Offer supplemental services to tenants and nearby businesses to create new revenue streams. From shared or cooperative marketing, building-wide tech support and HR, or storage space, property managers can add value while creating income.
Make Your Commercial Property More Profitable
Keen Technical Solutions is the premier commercial property contractor in Traverse City. With over two decades of industry-leading experience, we combine energy-efficiency expertise with robust property development services to build bright, sustainable futures. We are investing in northern Michigan businesses; start your project with us today.