Extracting extra value from your existing assets

Some of the simplest strategies to improve property value and tenant retention are found by unlocking the idling capacity in your existing assets, says Moore Stephen’s director Ross Sicuro.

While some markets are faring better than others, improving the value of a property is relevant to any building owner, Sicuro (pictured) says. And the best place to start is by hunting for hidden value.

“Have you considered signage and naming rights? Could surplus car parking provide you with a casual income? These are the questions to consider.”

Sicuro also suggests landlords look at how to increase an asset’s floor space without altering the floorplate. This may mean additional lightweight floors or rooftop gardens.

Other ‘value adds’, such as concierge services, end-of-trip facilities, car washes and child care services, can lure new tenants into a crowded market.

Sicuro recommends investigating the installation of solar energy as a savvy financial solution with sustainability benefits.

“Depending on the size of your building, you may be able to buy the power and sell it back to your tenants, and gain the benefit of the solar rebate. This can generate additional revenue, reduce the outlay for your tenants and make your offering more competitive,” he says.

Measures which boost the experience for customers will also benefit retail landlords, Sicuro says.
“Some shopping centres on surplus land are creating pad sites for food vendors, attracting new life into a forgotten corner of a centre. Inside, building in new kiosks and promotional displays can introduce new revenue streams and enliven dead space,” he suggests.

Activating the centre’s outdoor spaces is equally important, with outdoor dining and seating a proven customer magnet.

“Carwashes, dog grooming and one-off school holiday events can also attract a new crowd to your centre,” Sicuro adds.

The message is to reassess what you already have – and how to extract additional income and value.
Sicuro says it’s also important that asset owners keep a close eye on their outgoings, options and incentives.
“Understand the rate of increase in local and state government taxes. A trend analysis will reveal how they have increased year-on-year and help you get a picture of whether there is an issue around valuation that can bring the cost down.

“Look at the renewal options in your leases. These generally only benefit the lessee and take away flexibility for the landlord.

“But don’t wait until crunch time to renew tenant leases – the earlier you engage, the more likely you are to retain your tenants and will need fewer incentives to keep them.

Sicuro also warns that incentives can be costly, so landlords should consider how these are structured.
“Giving tenants a dollar today is worth more than a dollar tomorrow, so look at how to provide incentives over time rather than up front.”

Finally, reinvest in your property, Sicuro advises.

“It’s no good extracting all the value today if it no longer meets the needs of the market tomorrow.”

Speak to your local Moore Stephens relationship partner to work out a plan to maximise extra value from your existing assests.