Value Add Opportunities 02/20/23

hemenway TL

As a property investor, finding ways to add value to a building can be a key strategy for achieving long-term success. With the Fed anticipating more interest rate increases in 2023, many property owners and investors may feel negative effects however these market conditions can create opportunity.  With the continuous changes in building codes and city ordinances, savvy investors must be able to identify buildings that are out of compliance, as these may be available at a discount if the right approach is taken.

One way to value-add occupied buildings is through a thorough analysis of the building's energy efficiency. With new building codes (like BERDO, BEUDO) all pushing toward passive home-like sustainability,  and the rising cost of energy this will be a key area for owners/managers to consider. Tenants are also increasingly looking for buildings that are energy efficient and environmentally friendly. Updating heating and cooling systems, adding insulation, and upgrading to energy-efficient windows can make a significant impact on the building's energy consumption, reducing costs and increasing its value.

For building owners also planning aesthetic common area or unit renovations it will be essential to incorporate key infrastructure upgrades into this process. A majority of building owners already have a budget in place for common area updates or unit turnovers but they should not ignore infrastructure in this process. Doing so at the same time in an efficient manner with the right team could mean savings on construction costs while checking multiple boxes and boosting NOI.

With shifting market conditions, building conversions are also now often considered to bring new life to outdated assets.  In Boston, office-to-lab conversion has become an attractive solution to meet the need for space biotech companies require on a faster timeline than new construction. However, there are many factors to consider during this process.

  • Code Requirements: Before converting an office space into a lab space, it is important to understand the local building codes and regulations. The space must meet certain standards for fire safety, ventilation, and electrical systems, and meet requirements for hazardous materials and waste storage.

  • Infrastructure Needs: The conversion process may require significant infrastructure upgrades, including the installation of specialized electrical and plumbing systems, and ventilation systems. Ensure that the building's existing infrastructure can support the changes you plan to make.

  • Cost Analysis: Converting an office space into a lab space can be a costly process, and it's important to have a comprehensive budget that accounts for all costs, including design and engineering fees, construction costs, and equipment costs.

  • Equipment Considerations: Laboratories require specialized equipment such as fume hoods, centrifuges, and refrigerators, which must be selected and installed to meet specific needs and regulations. Ensure you have a clear understanding of the equipment requirements and budget for it.

  • Future Expansion: It's important to consider the long-term use of the space and plan for future expansion if necessary. Consider the available square footage and floor plans, and ensure that the design allows for flexibility in the future, as the lab's needs may change over time. Additionally, consider the possibility of reconverting the space back to office space if needed, which may impact the design and construction decisions.

 

In conclusion, the key to adding value to occupied buildings is to identify areas where improvements can be made, whether it is through physical upgrades, improved amenities, or better management practices. By considering the changing codes and city ordinances, investors can take advantage of buildings that are out of compliance and available at a discount, and turn them into valuable assets that can generate significant returns. Hemenway Construction works with a team of architects, engineers, and energy conservation specialists to look at dollars spent from a 30,000-foot level so that nothing is left on the table. Managing expectations and delivering precise work production is essential when performing retrofit upgrades.  The Hemenway team specializes in occupied spaces to ensure that there is seamless communication and coordination with tenants, property management, and ownership. With the right team in place, investors will still be able to find opportunities in this changing market.

Contributor Bio

hemenway logo

Hemenway Construction Management has been developed as a new and up and coming general contracting and full-service construction management company for the 21st century. We strive to provide “back to basics” service with a modern sustainable platform. The combination of innovative research, cooperation with local, state, and federal organizations and programs, and willingness to stay on the cutting edge with the latest in software and integration, separates Hemenway from other companies in the industry.

We provide general contracting services, construction services, preventative maintenance services, and mechanical service to the New England area, mostly limited to Massachusetts but also NH and RI. Hemenway covers a wide range of the industry from new construction to remodels and rehabilitation projects, to sustainable upgrades in both the residential and commercial sectors. Whether developing a new community or adding solar panels to your rooftop, Hemenway will carry you from planning and design through to a successful finished product.

Hemenway Construction Management >>