How to boost revenue for vacant office space
With notes coming due and continuing vacancies, creativity is key to boosting revenue.
If you’re like many office owner/developers, the global COVID disruption has had lingering effects on office property performance, primarily in the form of lagging occupancy. Even with pandemic mitigation efforts largely in the rearview mirror, office vacancies continue to pose challenges for commercial real estate investors, including in the 7 Rivers Region, Rochester, MN, and beyond.
Add to the that the pressures of borrowing notes coming due, and the situation demands decisive, effective action to boost revenue for vacant offices. The good news is there are many potential solutions for boosting revenue even as occupancy is slow to bounce back. Let’s take a look at some of the creative approaches to bolstering revenue amid of ongoing office vacancies.
Creative ways to boost revenue with empty office space
You can take one of many directions when looking for ways to generate revenue even as occupancy lags for commercial real estate. Here are a few that may work for you.
1. Augment service offerings for existing tenants.
One way to improve cashflow is to provide additional services and products to your existing customers. For example, you could offer cleaning services at a cost, then partner with a cleaning service you know and trust to contract out the cleaning needs of your tenants. Your charges should be added on top of the contracted cleaning fee, resulting in profit for you. You may also consider adding in a cafe, bar or coffee shop to your building. A la carte and concierge services can also be added for an additional fee, offering convenience to busy professionals. Assessing the needs and wants of existing tenants can help you determine which services deserve your time and energy.
A lease addendum can be developed for these services for existing tenants, and moving forward you may want to include select services in lease agreements.
2. Rent out your unused spaces.
While time is money, it’s easy to forget unused space can also be money. Boost revenue for vacant offices by offering them as rental storage space, warehouse space, unused office storage space, and, whether uncovered or covered, as rental parking priced appropriately. You may even want to consider leasing out spare land if you own large or desirable plots. Of course, the use of land should be considered through the lens of local ordinances and regulations, and the impact on existing tenants, as well as how much revenue the change may generate.
3. Create co-working spaces, conference rooms, and event spaces.
Converting unused spaces into rentable spaces can help bolster your income. Your unused or underused square footage could be valuable to small businesses, event planners, and members of the general public. Best of all, if your commercial real estate is already outfitted for offices, some of these solutions may require little effort from you. An unused office space with Wi-Fi and office equipment can be quickly and easily transformed into a coworking environment for freelancers, small businesses, work from home professionals, and independent contractors. Depending on the location of your property, rentable workspaces can offer a solution to long commutes or cramped home offices. In addition, businesses hosting large meetings and events are often in need of overflow conference room space, lecture halls, and training rooms.
4. Provide corporate housing.
If your properties are suitable for apartments or homes for traveling professionals, you may be able to market those spaces for short or longer-term rental housing. Many businesses have a need for housing for traveling workers and visitors, and their needs can range from a simple space to luxurious units. Be sure to consider factors such as furnishing, maintaining, and cleaning the units as well as providing amenities and services that are a match for your target audience. Established pricing should typically be more affordable than hotels in the market. You may also want to market the corporate housing via strategic partnerships with local businesses, posting on social media, sharing on your website, and working with travel companies. Understanding the needs of traveling professionals is essential.
5. Consider billboard leasing.
If your commercial real estate has good exposure, you may find that billboard leasing can be an effective revenue generator. While there are some setup costs to erect a billboard, and eligibility depends upon local zoning requirements, providing advertising by leasing billboard space can generate thousands of dollars a month.
6. Add vending machines.
Vending machines can be purchased and serviced by your staff or provided by a vendor that handles the filling and maintenance. When installed in common areas with robust foot traffic, they can help increase revenue by monetizing areas that previously generated none, all with minimal effort on your part.
7. Partner with pop-ups.
Pop-up restaurants, stores, and events are gaining popularity as a way for businesses to test products and reach new clients. By leasing out your space to pop-ups you not only can generate income from otherwise unused square footage, you may also forge relationships with startups that will one day be seeking a more permanent home in commercial property.
Occupancy lagging for your commercial real estate? We can help.
If your commercial office real estate is still underperforming, we can help. The design and build experts at DBS Group are ready to partner with you to reimagine new uses for your property to boost revenue for vacant office space. When you’re ready to make a move toward boosting revenue, contact us, and together we’ll construct a brighter, more profitable tomorrow for your portfolio.