Ubiquitous in the minds of people who own commercial lots and explore for income is how to maximize their property to be able to reap the most profit.
In the midst of their excitement to put up their own building(s), confusion gets in, and owners sometimes make wrong decisions because they let others think for them.
Yes it's right to consult experts in Real Estate Management; however, it should be you who does the thinking most. You should be the one doing it . . . deciding what is in and what is out . . . . choosing what is best for your property.
Thus, it's imperative that you make your own decisions after you have weighed their suggestions or proposals and not others. It's not good to be too trusting when your investment is at stake.
How to choose the best suggestion or proposal that really maximizes your commercial property?
After collecting the proposals of consultancy or construction firms, you should conduct your own CBA (Cost Benefit Analysis) on each proposal and collate these to be able to determine the best one.
The one which benefits highly exceed the costs is the one appropriate for your property.
However, you should be careful on your assumptions or the assumptions given to you by the consultants. Yours or their assumptions may not be the case as these might be over speculative due to nonconformity of the proposed improvement to what really is prevailing or the HBU (Highest and Best Use) of the property.
These are the practical approaches in deciding what building to put up on your commercial property that will maximize its profit:
If all of the proposals suggest improving it with a high rise building, see to it that the proposed building strictly conforms with what is prevailing and if it's the case make sure that other existing buildings in the immediate vicinity had incurred minimal vacancies so as to be able to know that the proposed building is viable and will not be a fiasco, wherein your ROI is not what you have positively expected to be.
However if your property is situated in a growth-center wherein every now and then influx of business establishments is palpable, then it's just right for you to put up a building not conforming or higher to what is prevailing, for in the offing more and more commercial/office spacers will transfer in the area as their location strategy and be able to avail the prominence of the economies of scale in the said area.
If your property is located in a light commercial area where still preponderant are small businesses, then low rise buildings are the ones appropriate to be erected on it.
In this case, maximizing your property is maximizing its area and one way to do it is manipulating its shape.
If the commercial property you own is rectangular and the longer dimension is the depth, the right thing to do is to put up two buildings fronting each other and at the middle is a narrow road which traverses the property and is perpendicular to the abutting road serving as access.
If it's the other way around, meaning your frontage is longer, put up a 2-storey building. In a light commercial area, visibility of commercial spaces is the only thing that matters. Thus in putting up a 2-storey building, the higher and ground levels are both conspicuous at the abutting road.
Copyright © 2006 Edwin R. Malipayon, All Rights reserved
About the Author:
Edwin R. Malipayon is a Registered Electrical Engineer. He is also a Licensed Real Estate Appraiser and currently connected with UCPB as Senior Appraiser. An MBA graduating student at USEP. Pursuing writing his experiences and studies in Business and Real Estate Management. Presently processing his membership with American Society of Appraisers. You can email him at
happy_rem15@yahoo.com for your comments on his articles.
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1196
Date Published :
Oct 12 2009