Although commercial property rentals have stabilized following the global recession, on-going global instability is expected to remain at current levels for the short term which, while negative in some respects, also presents opportunities. So says Marc Edwards, Managing Director of Spire Property Management who explains that now is the ideal time for landlords to refurbish their properties as it will give them the edge when the market turns upwards again.
Says Edwards: “It is inevitable that the market will swing in favour of landlords again. As such, landlords should be proactive and refurbish their buildings to make them more attractive and affordable to future tenants. The fact that scarcity of work is making contractors highly competitive also works in favour of refurbishment plans.”
First off, Edwards says landlords must assess buildings both internally and externally. Crucially, landlords must also relook the target market that they are trying to appeal to and take measures to ensure that their building is competitive and geographically appropriate.
Reducing occupancy costs is also key notes Edwards. “With rising electricity tariffs, some of the most significant refurbishments that a landlord can undertake are those that reduce electricity consumption which ultimately translate into reduced occupation costs.”
The obvious place to start in this regard is energy management he says. “There are numerous consulting firms which can assist landlords in planning strategic utility cost reductions. Eskom is also very willing to engage with landlords on educating them on how to reduce their expenses and their impact on the main power grid,” adds Edwards. “It’s important to note that not all changes need be expensive. Simple changes such as converting to LED lighting or utilising other energy efficient light bulbs can also have an immediate impact on operating costs.”
Edwards also advocates establishing ‘green leases’. A green lease defines the shared responsibilities of landlords and tenants. It provides a platform for sharing the benefits of the enhanced performance of the building and balancing the respective costs between each party. In essence, a green lease ensures a building is operated in a sustainable manner.
“However, the “greenness” of a property is reliant on the buy-in of your tenants and landlords would be well advised to encourage their tenants to adopt green behaviour which will facilitate a win-win scenario.
“Of course there are many other initiatives which can be undertaken to make a building more appealing and competitive. By doing so, landlords will be able to not only attract and secure tenants but also command premium rentals. The upshot is that landlords must not just sit back and wait for things to change; they need to be proactive and position themselves in anticipation of better times to come.”