Investing in an Office Space for Revenue

Investing in an Office Space for Revenue

Most landlords get their start by investing in single or multi-family properties, because these are things that have stable long-term demand, but investing in an office space can be a viable way of generating more revenue, and can be a good option for landlords that want low-stress tenants, and who are looking to compete in areas where the domestic market is saturated.

investing in office space

Benefits Of Investing In An Office Space

Investing in an office space lets you reach a different customer base. In some states, there are issues with low income families and delinquent tenants, and it simply isn’t viable to try and compete in those markets because the sheer number of defaults reduces your total earning potential. It makes more sense to invest in an office space, because commercial tenants are more likely to offer stable income, and will usually take better care of the property.

Tips For Investing In Office Space For Better Revenue

Here are some tips and tricks to invest in office space in a better way.

  • The trick with investing in an office space is to find one that is at the mid-range price-wise. The starter/incubator business spaces can be an option as well, but only if you vet your tenants carefully. With the starter offices, you run the risk that the tenant will default, so your best option is to only accept tenants that have been given grant funding, or that are referred from a business support organization, and then have strict terms so that when the funding dries up if they miss payments you know that you can default them and start the eviction process quickly.
  • When you price your property higher, you will find that you can attract a much greater calibre of customer. By advertising slightly more upmarket office spaces, you will be able to reach businesses that are established and growing/upgrading. These are businesses that have credit ratings, and that have longer accounts, so you can have an idea of how credit-worthy they are, and whether or not they will default.
  • Office contracts range from easy in/easy out short leases, to year or longer leases, and also co-working spaces that will give you much greater revenue for your space. With a co-working space, you can sell space to more than one customer, and at a higher hourly rate. Co-working is versatile and is a nice solution for both customers and for the landlord as well, since once you get your marketing and booking worked out you can often achieve close to full utilization of the shared spaces, at a higher hourly rate, and therefore make more money.

Furnished vs Unfurnished

Typically, the higher end office spaces are furnished, but you do not provide computer equipment. Providing desks, chairs, storage and a usable kitchen is standard in the industry, along with wired up telephony and network ports-but the phones and computers/printers/etc are provided by the client.

Serviced offices are a nice option for revenue generation, but there is some work required to be competitive in the industry. You will need to offer a receptionist, catering, garbage collection, and in many cases cleaning services. You can charge a fee for all of these, which means that there is an opportunity to make some profit on them, but you must take care not to price yourself out of the market.

If you are struggling to fill your allocation of offices, then meeting spaces could be a good option.

Affordable Entry to the Industry

There is a growing trend for the idea of ‘meanwhile spaces’ in the office industry. These are offices for rent that are based in buildings that are broadly unoccupied or even scheduled for demolition. The idea is that an office company will occupy the property in the short term, and rent it out as an affordable space for people who want to have a city-centre office, without the fees. These will be shorter term clients, since typically you have access to those office spaces for only a year or two, but they are still a good way to get contacts and establish yourself in the industry-then over time you can work up to acquiring bigger, more permanent spaces, and running a full-service office.

If city center properties are not appealing to you, then another option is to look at smaller town office properties. The challenge with these is that you may face a higher turnover of clients, and since smaller towns are seen as being more affordable, lower prices means thinner margins.

The basic record keeping and management skills that you build up when you run a domestic landlord service will stand you in good stead as a landlord for an office, but you will find that you will need some other skills to deal with business clients. Start small and build up your client base and your skills at the same time, because an expensive office building could prove to be little more than a financial noose.

But instead of investing in the office space, if you are more inclined to generate rental revenue for multi-family buildings, your way to enter the accommodation industry is comparatively low risk way.
For any type of assistance, feel free to contact us.

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