In the current economic climate, with many buildings standing empty and tenants moving to find cheaper rents, it is can be difficult to see how investing in a refurbishment can pay dividends.
However, increasing the competitiveness of your portfolio may be a very smart move. Increasing the efficiency, amenity, and resource use of a commercial building may stop existing tenants looking elsewhere and it may attract new tenants to the building.
The Spring 2024 Invbrief report by Gerald Eve, finds that “At 0.3%, all property shows eked into positive territory in January 2024 for the first time since October 2022“, however there has been a general decline in office values with “UK Offices, however, have lost almost a fifth of their value so far”; while Central London has seen the largest uptake since before the pandemic.
Despite a large number of companies having returned to an Office environment, there remains a large proportion of the workforce that remain working from home, or having a remote working pattern involving both days at home and days in the Office.
The report estimates that in the past financial quarter 2.2m sq ft of new office space had been completed, with a high proportions of refurbishment work being undertaken; while it recorded the largest uptake in office space since 2018.
This seemingly permanent shirt to employee working patterns has resulted in companies having to adjust their office occupancy and ethos for office floor space, but with the right approach existing office stock can be re-purposed to fit with the current demand.
To ensure that your existing commercial property appeals to new and existing tenants and investors, it is critical that potential is maximised, which is turn maximises the return. There are a number of key areas that can maximise a building’s potential and return: Improve nett lettable floor area to gross ratio by rationalising cores and reducing ancillary spaces. Replace older building services installations with modern, efficient systems, to reduce energy consumption and carbon emissions. Improve the environment and well being for potential building occupants. Upgrade existing facilities to meet current standards, i.e. to ensure access for all, provide DDA compliance, etc. In this article we focus on ways to improve the nett lettable floor area, as this can often provide the biggest return when letting a building.