In the first part of our series on increasing the return on investment (ROI) of commercial buildings, we discussed lowering operating costs and reducing your risk of legal liability. This week we talk about how to make your rentable spaces more presentable through white boxing and spec suites.
Once you’ve lowered your operating costs and reduced your liability risks, the next best way to increase your ROI is to ensure that your vacant spaces are easy to lease. Part of that, of course, is aesthetics. What kind of style are prospective tenants looking for? Are you keeping your property up to date in a way that improves its curb appeal? What can you do — from the curb to the interior — to ensure that your building shows well?
If an empty commercial building is out-of-date or dingy, if the carpet is worn and the ceiling tiles are broken, if the doors are mismatched — these things dramatically detract from the perceived value of the building. In these cases, we recommend white boxing the space. In a white boxed space, anything old or junky is removed. The floors are stripped, the walls are painted white, and the ceiling tiles are updated or removed entirely. This makes your space much more presentable.
The value of white boxing is that prospects can see what’s possible. They’re not stuck in a maze of hallways with old doors, dingy ceiling tiles, and stained carpets. For most prospects, it’s a lot easier to visualize themselves in a clean space than in a junky one.
One of our clients does this with every building they acquire. They get rid of all the old junk, expose the ceiling up to the rooftop, and paint it, because they know that’s attractive to tenants. When prospects come into their space and it’s white boxed from floor to roof deck, they are always impressed. They say, “Wow, this is great. We can do all sorts of things in here.”
Likewise, consider upgrading smaller spaces into spec offices. A spec office is built out to be move-in ready. It’s got a break room; it’s got some glass wall offices; it’s got new lighting and ceiling tiles. Then, when a prospect walks in, they can see themselves in the space. It may not be perfect for them, but it’s move-in ready. They don’t have to make a lot of decisions or go through the full tenant improvements process. Some building owners will even furnish the space with the latest stylish furniture accessories.
We’ve been working with a client who recently purchased a nice, mid-eighties class B building. It had a couple of empty suites that they converted into spec offices, and those vacant spaces leased within a month. Searching for new office space can be pretty overwhelming, and spec suites cut through a prospect’s confusion. It helps them make the decision between your space and the one down the street, because now they can get back to running their business.
A space that sits there for years, just costs you money. White boxing and spec suites lessen your vacancy rate, and that’s money in the bank.
Check back next week to read the final installment of the Building Better ROI series, where we’ll discuss some of the amenities you can add to your building to increase its value.