January 21, 2013

Changing Property Use to Increase the Value of Your Real Estate Investment

Craig Trbovich Commercial Real Estate –

Recently I wrote 5 Ways to Increase the Value of Your Commercial Real Estate Investments, which included ideas to:  increase rents, make improvements, change property use, decrease expenses, and approve tenants.  This week I am going to expand on the third idea, changing the use of your property to increase value.

Changing the use of your property can involve a great expense and time to accomplish, but can also provide huge financial rewards.  Creative thinking and expert zoning knowledge are necessary skills to increase your chances for success.  For example, although a zoning request is often required to change use, it may be possible to use the current zoning differently by taking advantage of how zoning laws in the community are written and interpreted.

Timing can also be an important issue to consider.  What is the status of the leases in place? Is the current makeup of the local governing body friendly to development and zoning requests?  Is the market right for the opportunity you are considering?  Another time to consider the current use is when you are considering making an investment.  Look for a possible change of use as part of your due diligence because there may be a better use today than was originally intended.

Here are some examples of ways to change the use of your property to increase its value:


  1. A general office building near a hospital might be a good candidate for conversion to a medical building.  This could be accomplished gradually as tenants roll and often without a change in zoning.
  2. Changing a floor or large suite in an office building to an executive office suite.  Higher rents are typically achieved for executive suite tenants, and the activity and variety can provide a synergy to attract traditional full suite tenants.
  3. An older warehouse or office building in a high density business districts can often benefit from being converted to another use.  For example, a multi-story office building could become a mixed use building offering restaurant/retail on the first floor, and office and residential use on higher floors.
  4. An apartment building might be able to achieve higher rents if converted to an office building.
  5. Land previously used for agriculture can be rezoned for a residential or commercial use to add value.

As an investor, an annual review of your investments’ performance is critical.  And part of that annual review should include a consideration of the current use, especially for a building that was built many years ago.   There could be great opportunities to add value to your commercial real estate investment.

If you have other ideas that have been successful for you, please email me or post on my blog at www.craigtrbovich.com.  And for a no obligation analysis of your property, please call me at (408) 522-2799 and “TrboCharge” your investment real estate today.


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