How to unlock value in your commercial property investment

Sky rocketing interest rates have impacted the property industry globally. And the impact it’s had on the local market is already showing. The demand for space in the commercial office market is still holding its own, but in time we’ll most probably see higher vacancies in industrial property.

Although we are witnessing a shift in demand, it’s not something completely unique. Even in a market down turn it’s possible to maximize your property investment and unlock value in your property. Here are some tips:

1. SOLID INVESTMENT. Firstly commercial and industrial property remains a solid investment, one that retains stability in the market. Don’t discount that.

2. SET CLEAR OBJECTIVES. Decide carefully on your property objective. If your objective is long term versus short to medium term your outlook on gearing and interest rates needs to be far more conservative.

3. METHODS TO MAXIMISE. Generally in a downturn one needs to adopt a more cautious outlook and look at methods to optimise rental income and utilities recoveries. Improving rental collections, tenant retention and focusing on more structured procurement are simple tools to unlock value.

4. TAKE A NEW LOOK. It’s a good time to focus on the benefits that a revamp of the property may hold. Or what possibilities utilising underused bulk may deliver in improving the viability of your investment.

5. LOOK AT VALUE ADDED SERVICES. Look at extending the scope of your property management services beyond leasing, maintenance and rent collection. The reduction of your operating costs that value-added services like procurement and facilities management can generate are significant. In some cases savings of 20 to 30% have been realized by utilizing specialised procurement methods.

6. PARTNER FOR PROFIT. Find a company that is more than an agent or broker for rental space. Look for a partner that can help you on a more strategic level to assess your objectives and return on investment. These companies build a plan to work through the down turn to add value to your investment when the market corrects itself.

Article by: Johann Boshoff, Director JHI Property Services - www.jhi.co.za