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Beyond the basic cosmetic fixes, how can you increase the value of your property? Here are some of our best tips and practices from the experts at MarketSpace Capital.

1.   Can dividing a space increase occupancy AND revenue, and at what cost?

If you were to have a large vacancy that you are having a hard time leasing, you may be weighing your options on whether to demise the space.  In your property’s market area, there is likely a much greater demand for 1,200 sf – 2,000 sf compared to 3,000 sf – 5,000 sf.  It is common for owners to generate more revenue per square foot for a smaller space.

When faced with this decision, it’s important to have a broad idea of the type of tenants you will be targeting to fill the spaces. When evaluating your prospective user types some things to consider would be the amount of tenant capital reimbursements, the cost of dividing the space, Impact on parking, water/sewer capacity and electric load.

2.   Allow Leasehold Improvements

A leasehold improvement means that the tenant pays to enhance the space—perhaps by adding better fixtures, adding or painting interior walls or ceilings, adding in built-in cabinets, updating the flooring, and other similar fixes. Although the tenant pays for these updates, the ownership will transfer to the landlord at the end of the lease (except in rare cases where the updates can be removed at the end of the term).

Here’s why leasehold improvements are so great for CRE investors: The tenant is happy because they got the improvements they want. You don’t have to do anything. And, your property becomes more valuable without creating additional taxable income for you!

3.   Improve Zoning for Better Profit

Getting your property rezoned can increase the real estate value, allowing you to rent or resell the property for a better price. Maybe you find a residential property that would be fantastic as a commercial property. You may be able to get it rezoned. Then, you’re free to turn it into a commercial site—either by taking the house down and rebuilding, or by converting the house into a commercial space. Or alternatively, you could take an industrial or office site and turn it into affordable housing.

Just do your research and make sure there’s a strong need for the zone you are switching over to. Realize that rezoning, though it can be profitable, is time-consuming at the outset and that some cities and localities don’t have zoning requirements at all.

 

Looking for more ideas on how to increase the value of your property? Contact a representative at Marketspace Capital who can help you in creating valuable opportunities in your existing commercial real estate investments.

Contact MarketSpace Capital today by giving us a call or sending an email to info@marketspacecapital.com

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