10 Ways to Maximize Your Commercial Real Estate ROI
Commercial real estate in the Twin Cities has been on a rollercoaster ride since 2020. The impacts of the pandemic continue to affect many commercial real estate markets in Minneapolis and St. Paul. Here are a few ways savvy property owners can maximize the ROI of their CRE portfolios.
1. Do Your Research on Commercial Real Estate ROI
Before you make adjustments to your lease terms or update your buildings, be sure to do your research. Complete a competitive analysis to understand what surrounding properties are doing to attract tenants and adjust your strategy as needed. If you’re hoping to attract a specific type of tenant, such as a medical device manufacturer or healthcare provider, take the time to learn more about these potential tenants and their specific needs.
2. Optimize Your Lease Agreements
When’s the last time you took a look at your lease agreement? If it’s been a year (or a decade), it’s time to review and optimize your agreements. If you do not already include regular rent reviews in your agreement, consider adding a clause that allows you to adjust rents according to market conditions. You may also want to consider adding flexible leasing options to your agreements to attract a wider range of tenants.
3. Improve Property Appeal
If it’s been several years since you’ve invested in upgrades at your property, now’s the time to make a few updates that can help you make more money in the future. Spruce up your landscaping, update your interior design, and stay on track with your maintenance plan. Cost-effective updates can make a big impact in what you’re able to demand in rent and maximize your investment in improvements.
4. Retain More Tenants
Retaining tenants is a lot more cost-effective than attracting new tenants. To retain more tenants, make sure you’re providing an exceptional tenant experience. Keep the lines of communication open and address their concerns promptly. Consider offering incentives for tenants to stick around, such as improvement allowances, flexible renewal terms, or property amenities.
5. Invest in Sustainability
Your portfolio’s sustainability plan is a great place to increase your portfolio’s ROI. Smaller projects such as installing energy-efficient lightbulbs and water-saving fixtures can help you save money on energy costs. You may also choose to install more efficient HVAC equipment to cut your energy bill further. Not only do these updates help you save money, they can attract environmentally minded tenants.
6. Diversify Your Revenue
If rent makes up 100 percent of your portfolio’s income, it’s time to diversify. Diversifying your portfolio helps you weather downturns in the market and makes your income more predictable. One way to diversify your revenue is to offer additional services, such as event space rentals, rentals for pop-up storefronts, or storage space. Consider adding advertising and retail to common areas to additional revenue to your portfolio.
7. Invest in Technology
Smart building technology, access control, and property management software can all help you work more efficiently and increase your revenue. Smart building technologies optimize energy use and maintenance tasks. Smart access control systems track visitors to your property in real time so you can improve security. Property management software gives you a bird’s-eye view of your portfolio so you can draw insights from tenant behavior and your properties’ performance.
8. Expand Your Portfolio
A strategic acquisition can help you grow your portfolio’s revenue. The ideal property complements your existing portfolio and has the ability to grow with minimal improvements. Looking in another market can help you diversify your portfolio and capitalize on opportunities outside of your current area.
9. Review Your Finances
A simple budgeting and forecasting exercise can help you understand if your budget is on track and forecast future expenses and income. A little financial checkup can help you uncover areas where you’re spending too much and reduce unnecessary expenses.
10. Outsource Your Property Management
One way to optimize your time and ensure that you’re making smart choices in regard to vendors is to work with a property management company like Clarity Commercial. Our professional team can help you with everything from budget forecasting to fixing a lightbulb. We work with the best vendors in the area to ensure projects are completed at your properties on time and for the best value possible.
Like we mentioned last month, the CRE market is on the upswing in many areas, but we’re not out of the woods yet. Clarity Commercial can help you make smart investments that will maximize your revenue and diversify your portfolio. For professional commercial real estate management support, contact Clarity Commercial today.
For more information or to request a free estimate, visit their website at https://myclaritycommercial.com/ or give us a call at (952) 370-224-2699.
Affiliations & Credentials: We are proud members of IREM, CCIM and MNCAR along with various professional organizations and hold relevant certifications in the real estate management field. Our affiliations and credentials demonstrate our commitment to excellence and our ongoing efforts to stay up-to-date with industry best practices.
