Proactive approach key to property improvements - property improvement seen as critical element in attracting and keeping tenants in real estate market - Review & Forecast, Section IV

As landlords compete for fewer tenants in today's market, property improvement has become a critical tool in attracting and retaining tenants, and keeping vacancy rates low.

In approaching improvements to our office buildings, shopping centers and warehouse/distribution facilities, we've discovered it pays not to wait; even the simplest improvements can make an important difference. Repaving a parking lot, landscaping a property or installing energy efficient lighting or windows, may not be the "sexiest" monetary investment, but these seemingly minor improvements often make a significant impact on a property's value and reap priceless rewards in terms of tenant goodwill.

Now that tenants can choose among a variety of vacant space, more extensive improvements are often necessary for older, outdated properties. For example, we've just completed the engineering plans that will raise the roof on one of our industrial properties from 12 feet to 21 feet. While industrial buildings with low roofs are preferable to taller buildings for research and development due to energy cost constraints, they cannot satisfy all requirements for warehouse space where cubic space is an important factor. We believe a radical improvement such as raising the roof, though costly, would increase the building's value and marketability. For example, to construct a new building would cost $25 to $30 per square foot, while raising the roof will cost approximately $10 to $12 per square foot.

If a shopping center is in a good location, a facelift will generally attract more shoppers and make the property far more marketable to a better caliber of tenants. After we refaced our 64,000-square-foot shopping center in Albertson, New York and improved its parking lot, lighting and signage, we were able to enlist the support and financial contribution of the center's tenants, many of whom paid for their own new storefronts. The tenants became our partners in this mutually beneficial project, which increased the property's value and helped the center's merchants achieve higher sales volume and increased profits.

Our experience has shown that a facelift helps 90 percent of the time. We recently refaced our North Massapequa Plaza shopping center, where improved signage and lighting have already helped us maintain an occupancy rate of 99 percent. In this case, we performed a 48-hour facelift, using a prefabricated panel system that is installed in two days. Our tenants were quite pleased that the process eliminated the need for scaffolding, which can cause long-term disruptions to consumer traffic.

One of our most ambitious current projects is our planned renovation of three low-rise commercial buildings on Broadway in Hicksville that cater to local merchants.

COPYRIGHT 1993 Hagedorn Publication
COPYRIGHT 2004 Gale Group