When you buy a piece of commercial real estate, you have the option to keep it the way it is or renovate it for the new tenant. There are pros and cons to each option, depending on what kind of tenant you plan to work with. If you plan to sell the property outright, you have an entirely different dilemma to go through. We will cover all of that here. Is commercial property renovation worth the money? Yes and no…
Renovations To Do No Matter What
No matter what your circumstances may be, it would be wise to invest in renovations that impact the structural integrity and safety of your property. For instance, if the foundation is sunken, you would want to pay to have that fixed. If your property needs a new roof, new parking lot or new siding, you would want to have that work completed before getting a buyer to come in. Make sure the property will pass a safety inspection to maximize its value and preserve its integrity while you are trying to rent or sell it. The money you spend will not go to waste.
Renovations To Wait On
Cosmetic changes like paint colors and flooring materials will probably be best left to your future tenant. The only exception is in the case of a strip mall where you want all your stores to have the same look on the outside. You can still let your tenants choose the color schemes on the interior of their stores, but you will need to be in control of the exterior. If you spend money on flooring that your tenant has to rip up, it will not work in your favor.
You may also want to avoid renovations that will change the layout of a space. Your tenants will want to customize this to fit their needs. Do not move walls or rearrange offices unless there is an immediate need to do so. Let the new inhabitants figure that out.
Renovations To Negotiate Over
If there is a tenant-specific renovation that will improve the overall value of your property, you might want to cover the costs of it. This is most often the case when the tenant wants to build onto the property. As long as you approve of the plans for the build-out, you can get a lot out of the money you spend on it.