BOOK A FREE CONSULTATION

news

LATEST NEWS

7 Ways to Maximise Rental Income from Commercial Properties

Sep 22 2023
Commercial properties available for rent offer outstanding earning opportunities. As with any business model, seeking new opportunities to increase this financial yield will always be a priority. Experts claim that a rental yield of around 10.7% is possible with commercial properties. If your building is not achieving this, it could be time to investigate ways to improve your earning potential.

On paper, increasing a profit margin based on rental yield is simple – just increase the monthly chargeable rate. Alas, increasing rental margins above the market rate can understandably lead to ill-feeling among incumbent tenants. Reliable tenants are worth their weight in gold when managing commercial properties, so it’s advisable to do whatever you can to retain them.

Rent increases are a fact of life and are undeniably a way to increase profits – provided these increases remain fair and are introduced fairly and strategically. However, in addition to this approach, consider increasing value for tenants. We’ll discuss seven ways that commercial buildings can be enhanced enough to justify increases in monthly charges.
7 Ways to Maximise Rental Income from Commercial Properties

Increase space

The term “less is more” never applies to space in a property, whether commercial or residential. The bigger your property – or at least the bigger your property appears – the more you can charge a tenant.

 

The best way to gain more space in business property is to undertake an office fit-out. Some tenants may be willing to do this themselves, but others baulk at the prospective expense of doing so. If you can balance the books of a fit out the process will be an investment, not an outlay.

 

Here at Imperial Building Solutions, we have years of experience working with commercial landlords and agents to maximise rental opportunities. Our projects have ranged from complete office fit-outs to making improvements to increasingly dilapidated premises.

 

Embrace technology

Installing the latest and greatest technology can be a great way to attract tenants to your commercial property – and, of course, to keep them there. If you provide sufficient upgrades on the facilities in a building, you can justify a rental increase to recoup your costs.

 

For the avoidance of doubt, we’re not referring to IT equipment here. That remains the responsibility of your tenants. Things to consider installing, however, include:

 

  • Enhanced infrastructure to enable faster internet speeds
  • Smart lighting to mimic circadian rhythms of tenants
  • Smart locks and similar approaches to strengthen security
  • Bluetooth availability throughout the building
  • Charging ports – USB or, ideally, wireless – throughout the building

This is just the tip of the iceberg as to what technology is available. Do a little market research and confirm what would appeal to your core tenant base. Choose wisely, and the expense of installing these upgrades will be recouped and greatly enhanced upon.

7 ways to maximise rental income from commercial properties

Dress the property

Comparatively, minor, aesthetic changes will not justify a significant rental increase. However, a handful of additions to dress a property can make a difference to tenants. That will make adding to a monthly asking price an easier pill to swallow.

 

Applying decorative touches to a property, such as full-sized mirrors, can give an impression of more space – in addition to helping a workplace feel modern. Even small flourishes, such as flowers on a reception desk, can brighten the demeanor of the building and leave occupants more amenable to discussing rent increases.

 

Perhaps the biggest value offered by dressing a building is offering furnishings, though. From sofas and armchairs in communal areas to essential desks and chairs for staffing teams, contributing to dressing a property as part of a fit-out can be a great way to impress tenants and prospective clients. 

7 ways to maximise rental income from commercial properties

Provide maintenance services

One of the most reliable ways to increase rent without attracting complaints is to enhance value by offering more bang for the tenant’s buck. Consider making commercial maintenance services part of the rental agreement with your tenants (assuming your business model can provide these!)

 

You’ll need to handle this carefully. Do not spring the agreement upon your tenants without consultation, as they may already have a contract in place with a maintenance business. Also, ensure that you draw up favourable terms that can be maintained. Substandard maintenance that leads to health and safety risks can leave your business at risk of withheld rent at best and legal action at worst.

 

Overall, though, bundling maintenance with rent is arguably the best of all possible worlds for commercial landlords. You’ll increase your monthly yield, retain control over the supervision of the property, and leave your tenants feeling they are getting a fair deal on their increase.  

7 ways to maximise rental income from commercial properties

Allow vehicle parking

Never underestimate the impact that offering parking within a commercial property can have on value. Recent events have made commuting by public transport undesirable for many people. The ability to drive a personal vehicle, and leave it close to a workplace, carries a great deal of appeal.

 

If you can invest in the land surrounding your commercial property or find another way to offer a car park, you will have a failsafe reason to increase monthly rents. In many respects, a car park in a commercial building is as appealing as a private parking in a residential property. Remain on the right side of health and safety law surrounding parking at work, and the investment will pay for itself many times over. 

Arrange additional events

This will not work for all commercial properties, but it’s something to consider. Could you earn some extra income by leasing out part of the building for private events?

 

You will need the full cooperation of your existing tenants for this, and they have every right to say no. Reasons to decline could include concerns over the security of private data, property damage, or other explanations the tenant is under no obligation to provide.

 

If the tenant does agree, though, think of ways that you could bolster your income. Parties on the roof or any gardens on the property? Using the boardroom as a conference centre? Additional work desks for businesses that are experiencing pinch points in terms of deadlines and need to bring in extra hands? The opportunities are potentially endless.

7 ways to maximise rental income from commercial properties

Enhance your reputation

If you are looking to gain the maximum yield from a rental property, we recommend working with a high-quality commercial agent.

 

The logic behind this is relatively straightforward. Consumers of all shapes and sizes, working in any niche or industry, are prepared to pay more to providers they trust. It’s the old adage of being “reassuringly expensive.” 

 

Great work from a commercial agent will reflect well on a landlord. In turn, the better your reputation within the sector, the less likely tenants will raise an eyebrow when it’s time to renegotiate rental contracts. 

 

Conclusion 

We hope these tips will help you increase the rental income for your commercial property. If you need any further information or want to discuss your option in more details then please do not hesitate to get in touch with us – 020 3375 9075 or email us at enquiries@redr58.sg-host.com.