Increasing the Value of Commercial Real Estate

Increasing a commercial properties value is the owner’s ultimate goal and it doesn’t always mean you have to spend money to increase the value. NOI, or net operating income, is determined by subtracting the operating expenses from the gross operating income. A savvy property manager can find multiple ways to increase NOI while spending very little. 



At Block Real Estate Services, (BRES) managers incorporate many different strategies into efficiently and effectively managing a property in both its fiscal and physical properties. Some of the following items below are ways BRES has increased their NOI.

• Negotiating contracts shrewdly. Don’t be afraid to request price cuts or negotiate for multi-year contracts with price fixes or using economics of scale and hire the same vendor for multiple properties.  

• Utilizing your Energy Management Systems. Place setbacks on thermostats, timers on office and common area lighting, or utilize optimal starts and stops on your building automation system.  Proactively audit energy usage in your property. Be sure to take advantage of AccountLink through KCP&L and monitor usage at a property along with performing preventive maintenance inspections on your mechanical equipment. Look for extraordinary usage trends to determine where savings can come into place such as fans or motors running excessively, renegotiate peak rates on buildings with a large occupancy shift or research rebates for upgrades to your building. While lighting retrofits and thermostat upgrades can seem costly, it often pays to complete a thorough life cycle cost analysis. The analysis will not only help convince the owner it’s a worthwhile project with a minimal payback period, but also intrigues tenants that are looking for greener ways for you to operate. 

• Review appealing taxes & evaluate property insurance. Review the data used by the tax assessor’s office for accuracy and ask for a reassessment. Meet with your insurance representative and employ regular inspections, checklists and other measures that can decrease your costs. These are two of the largest expenditures in an operating budget and lowering them can significantly increase your NOI. 

• Employ the use of vacancy management. Be readily available to your tenants at all times.  Listen to their needs and implement them when at all possible. Send out surveys to get their opinions on the building’s janitorial services, engineering/maintenance services or even the improvements they would like to see at the property and then take the necessary steps to implement them or discuss with them why projects are not taken on at this time, but considered at a later date. Showing the tenants that their opinion matters goes a long way in lease renewals.

A property manager’s ultimate goal is increasing the owner’s NOI, lowering tenants operating costs, all while meeting the owner’s objectives certainly isn’t an easy task.  However, employing some of these tactics can make the job easier.

Contributing Author:

Mikele C. Torgler
Associate Director of Property Management
Block Real Estate Services, LLC
LinkedIn