Energy management today is becoming a big issue when it comes to the performance of a commercial or retail property. As energy costs rise, the outgoings for each and every investment property need to be looked at and refined. That is where the skills of a professional commercial property manager take precedence above ordinary agents that do not have the right experience in commercial or retail property.
High energy costs will reflect in high outgoings. It is normal for the outgoings to be recovered in one form or another in the performance of the property. Typically the tenants will pay for the outgoings in either a net rental or a gross rental. If either rental is too high when compared to other local properties, the tenants looking for new premises will not lease your vacant premises as situations allow.
If the outgoings in a particular property are too high, the following problems will be evident:
- Tenants will seek to move to other cheaper accommodation
- The vacancy factor in the property will rise
- The leasing of vacant premises will become more difficult and protracted
- The incentives that are offered to incoming tenants will need to be higher to offset for the excessive level of outgoings
- Competing properties in the local area will be more attractive to those tenants that are moving around and relocating.
In simple terms, the outgoings for an investment property need to be carefully managed. Energy will be a part of that process and in some cases quite a large part. Get details from other property managers in the local area to understand the levels of outgoings that apply in similar competing properties. Compare those numbers to the levels of expenditure in your property. Make sure that your property is in the ‘average’ zone when it comes to costs.
When it comes to energy, savings can usually be obtained through careful management of the existing plant and equipment, together with the common area lighting in the property. Tenants and the property will normally be paying for their energy as consumed. On that basis they will be monitoring their own internal consumption within their premises.
So let’s look at the common area of the building and the strategies that can help you save on energy costs:
- The operating hours of the property should be identified to a core period of time. That will normally be 8.00 AM to 5.00 PM Monday to Friday. Occupancy conditions will need to be maintained comfortably during that window of time. The air conditioning and the lighting in the building should be timed to provide appropriate levels of comfort and security. It is likely that you can adjust the operational hours to save some money here.
- As the seasons change throughout the year, the plant and equipment can be adjusted in operational hours to save on operational costs. Consult with your building contractor’s to identify modifications in that regard.
- The lighting in the building can be adjusted to or replaced with energy saving devices. Today there are a wide array of lighting products to do just that.
- Outside natural sunshine should be fully utilised in the property itself to minimise the need for further internal lighting. Look at the design of the windows and the window treatments to optimise the penetration of outside light.
- When tenants design fitout, they can consider ‘open plan’ layout and common area corridors that allow for the flow of natural light through the premises.
- Incorporate ‘light wells’ and atriums in new property design that will filter natural light into the middle of the property.
- Some of the older plant and machinery in the building could be functioning inefficiently based on differing technologies. There will be a point in time where the older equipment will need to be replaced with more efficient machinery. The replacement cost will be offset by the savings over time in operational costs in the property.
Saving money in energy and operational costs for a commercial or retail investment property is not hard, it just takes a questioning mind and a creative attitude. Keep your outgoings under control and you will encourage your tenants to stay in the property.
If you want more tips and ideas to help your commercial or retail real estate business you can get a free ebook right here at http://www.commercial-realestate-training.com
John Highman is an expert real estate author, international conference speaker, and coach. He helps Real Estate Agents around the World to improve their market share, negotiation skills, listings, and commissions.