7 Money-Saving Tips For commercial property owners in a high-cost world
It’s outgoings budget time and again we are reminded how important it is for commercial property owners in the Northern Corridor to take proactive steps to save money on their outgoings. This is true for both investors trying to increase their return and owner occupiers looking to improve their business profitability. The high CPI of recent times has impacted all properties across our managed portfolio of more than 550 tenancies. For example, we have seen an average increase in council rates of 6.0% in the last financial year. The following are some practical tips our property management team use to help commercial property owners achieve savings and foster positive tenant relationships during economically challenging times. They are proven to work and you can use them for your property:
Negotiate Service Contracts and Insurance
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While price pressure on most areas is trending up, a softening of overall market conditions means we are seeing some suppliers and service providers sharpening their pencil. By taking the time to negotiate these contracts based on seasonal demand and property specific risks, our team are realising real cost savings for owners and tenants. For example, garden maintenance can be reduced significantly in winter and insurance premiums can be negotiated based on risk profiles and claims history. Committing to longer term service contracts and leveraging economy of scale if you have multiple properties can also lead to cost savings.
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Embrace Solar Power Electricity costs are reported to be up 30% in the last three months. Transitioning to solar power can significantly reduce electricity expenses for commercial properties. Incentives, tax credits, and rebates offered in many regions make the initial investment in solar energy more feasible. Additionally, many government and public tenants now have sustainability mandates, so going solar can broaden the pool of potential tenants. Conduct an Energy Audit Regular energy audits are crucial for identifying areas of energy inefficiency within the property. Professional audits can reveal energy wastage and highlight opportunities for costsaving upgrades. Simple fixes like sealing air leaks, upgrading to LED lighting, and optimising HVAC systems can lead to significant reductions in utility bills. Transparently sharing audit results with tenants can foster trust and encourage energyconscious practices among occupants.
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Negotiate Service Contracts and Insurance
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Practice Preventive Maintenance
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Water expenses can constitute a substantial part of a property’s outgoings. low-flow fixtures, sensor-activated faucets, and efficient irrigation systems can curtail water usage. Educating tenants about water-saving practices further encourages responsible water consumption.
Adopting a proactive approach to property maintenance can prevent costly repairs in the long run. Regularly inspecting and maintaining essential systems such as roofing, plumbing, and HVAC can extend their lifespan and reduce the likelihood of major breakdowns. Preventive maintenance not only saves money but also enhances tenant satisfaction and retention. Optimise Common Area Expenses For properties with shared spaces, optimising common area expenses is essential. Body Corporate managers are not always incentivised to proactively reduce costs and collaboration between tenants and owners is necessary, but the benefits can be significant. Installing energyefficient lighting and timers, using motion sensors, and implementing temperature controls can lead to substantial cost reductions. Encourage Sustainable Tenant Practices We encourage our owners to co-invest with their tenants in any sustainability initiatives that will save money. These can be as simple as window tinting or blinds that reduce the load on air conditioning systems. Other examples include timers for signage lighting, master switches for office lighting (rather than relying on individual room switches). Many of these improvements can be depreciated quickly and almost always translate to higher property value.
In truth, most owners will not follow these steps because it’s a painful, confusing process to navigate and the savings seem too small. Many owners with net leases will just leave cost saving to the tenants, who are equally time poor and ill-equipped. The simple truth is a building with lower comparable outgoings can charge higher rent and still be competitive in the market. Saving $1,000 a year may not seem like much but becomes more significant when you realise every $1,000 of extra net income on your property increases its sale value by about $15,000! This is why our team takes outgoings so seriously.
Reach out today if you would like more advice on how this applies to your specific property or if you would like our management team to come onboard and help you.