Your Real Estate Asset: Achieving the Best Use & Greatest Financial Payback

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As COVID wanes and deals wax, commercial real estate is flexing its muscles to reinvigorate the economy. The number of on and off market transactions are well ahead of predictions, and the pre-COVID numbers. This can put a strain on a buyer’s ability to perform due diligence and come to a clear understanding of both the actual and potential assets being purchased.

This is where documenting the physical building asset comes in, and it is a skill not everyone has. The ability to do it accurately and efficiently has grown with technology. And with any new technology a new skillset is needed.

Where to Start:

The Technology – For a long time, Building Information Technology (BIM) was one of the greatest inventions since the Blackberry smart phone. BIM is a digital creation of new/original building drawings or drawings created by measuring existing buildings. How we measure those existing buildings and spaces is the latest leap forward. During my time as an architect, we have moved from measuring tapes and clipboards to laser measuring to today’s laser scanning (LIDAR). Today’s LIDAR is faster, smaller, and more accurate; accurate to a hundredth of an inch, gathering information on anything in its line of sight in all directions including buildings, site features, and topography. Scanning is also faster and requires less technical training. The scans create augmented reality-like images that can be scaled and traced to produce very accurate, data packed and manipulatable drawings – the graphic component of BIM. Bottom line, more information for less money.

So, What does this Newfound Information Mean to You?

Repositioning & Repurposing – It has been widely published and popularly believed that Retail has died, and the Office is going hybrid and remote, leaving lots of empty Gross Leasable Area (GLA) in its wake. What to do with those buildings is the question lurking on the minds of many. The answer is to Repurpose and Reposition. Current technology allows us to create accurate drawings of these existing buildings for their new, and more profitable use. Drawings created by skilled and experienced architects, using today’s technology results in tight bids, and few change orders resulting in greater value and profit for you, the owner. The return on a good as-built drawing set is recognized even before construction begins.

The Acquisition/Due Diligence – how any times has a rent roll been “stretched”? Then the property goes on the market and a deal is struck. The current technology presents the opportunity to use the same documentation in the due diligence phase as well as in the operations phase. It also is an irrefutable way to know just how big the building is and justify – or challenge – the rent rolls, and any needed negotiation. What is the best time to find out about an inaccurate area verification? The answer – before you own it!

Debt and Financing – We had a client who bought several connected medical office buildings. The property also included some higher ed spaces. They thought it was a great value, yet it got even better when we were able to show that they had purchased 200,000 sf more than they thought! Sounds like an overnight 8 figure valuation increase. In this case, having accurate square footage numbers before financing may have helped them.

Leasing and Management – Rent rolls often seem to be made of rubber; sometimes you really need to organize them and put them into balance. Having a reliable As-Built in a BIM format makes that not only possible but hard to resist.

  • Stop measuring the building every time there is a tenant change.
  • Show a graphic timeline of the core factor changing with each lease.
  • Get ahead of the competition and produce test fits and LOD’s in hours, not days.
  • Spend less to re-tenant your building. As an example, if the cost to document the entire building is $5,000 and you save $1,000 on field verifications with every new lease, it is not long before you see a return on your investment.
  • Reduce change orders and construction bids with accurate drawings that do not need contractors to build in “fudge factors” to make up for drawing inaccuracies and inconsistencies.

There are many ways to build a database of real assets. From that data new opportunities can be found, and increased returns on existing assets are within reach.  Leaders in the industry are proactively using these methods to build their bottom line. Ask me how JL Architects can help you reach your project goals.

John Lister, Founding Principal