There are some interesting forces at work in the commercial real estate market in Phoenix right now. A report from ABC 15 highlights two trends creating a potential boom in the area. On one hand, more Baby Boomers are living out their golden years in the Grand Canyon State. On the other, rising rents are driving businesses and their millennial employees out of neighboring California in record numbers. That’s a golden opportunity for anyone in CRE, but it also means property owners and managers will have to step up their game to compete and command the best rates. It could be time for a rental property renovation with ArDan Construction.

Where Should You Consider Renovations?

The rules of thumb for undertaking a renovation on an apartment or condo rental don’t change much just because the property is for rent and not for sale. So if you’re looking at renovating a commercial property, it helps to approach it no differently than a homebuyer would. That means considering the following:

• Curb Appeal: Address issues both cosmetic (peeling paint, damaged siding, and the like) and structural to ensure that the first impression is one that makes a positive impact.
• Useful Kitchens: Not every rental property has enough space for a kitchen suitable for the next Food Network hit. However, with a bit of creativity it’s possible to find a layout that’s both inviting and useful.
• A Nice Bathroom: Besides the kitchen, the bathroom is one place many homeowners renovate first. Your renters can’t renovate, of course. So if they see a room that’s cramped and dark, with fixtures that don’t look “vintage” so much as old and worn, they might think twice.
• Closet Space: We have never — not once — heard a homeowner or tenant say, “Yeah, it’s a nice place, but did they have to have so many closets?” No one will complain if an apartment or condo has ample closet space, since all of us accumulate a lot of belongings over time.

Why Renovate?

There’s one more consideration regarding rental property renovations that’s especially relevant to CRE: ROI. If present trends continue, we don’t expect a contraction in the Phoenix housing market for some time yet. That’s good news for builders of new homes, but the opportunity shouldn’t be overlooked if you’re dealing with renters and lessees. A small investment now can mean the difference between a lower rental rate and being able to command a higher premium for something you can honestly list as a “charming pre-war walkup” because it doesn’t lack for character but has the amenities today’s homeowners crave.
And yes, we said “owners.” You’ll not only attract higher-value tenants, you’ll also find that those who feel at home stay longer, with more of a sense of ownership, so you’re spending more time profiting than looking for new tenants.