The first thing that comes to mind when commercial real estate (CRE) property managers and owners hear the word revenue, is rental income. And while filling space is obviously the largest contributor to top-line revenue, in this age of driving NOI optimization, it’s not the only way to positively impact the bottom line. We put together this list of some additional revenue opportunities CRE operators may be either overlooking or not fully leveraging:
1. Conference room and event spaces
Many buildings have available space in their property that tenants can reserve for meetings and events. Property management teams can generally charge a fee for these perks, even if the fee is nominal. It’s generally an easy source of incremental revenue. The challenge to doing so regularly is often managing the promotion, scheduling, and fee process. The simplest way to do this is through software where your tenants can reserve the space themselves and start the process. This removes the manual process of penciling-in events to a calendar and approvals, freeing valuable time for your property management team. It also assures you are effectively tracking and booking your conference room and event space; capturing all available revenue opportunities associated with the available resources.
2. Amenities
To meet tenant expectations, many CRE properties are constructing and offering in-building amenities. A gym or bike storage are common examples. If you offer a gym facility to your tenants in your building, you can still charge a fee for that amenity. Some landlords build this cost into tenant leases, others charge by individual usage. Either way, this is a simple opportunity to increase revenue. In fact, the building we work in sent out a survey recently asking if we (as in individual occupants, not just the company) would be open to paying a small fee to use a gym and, if so, how much would be reasonable? The same goes for other amenities such as parking. This is a simple way to drive revenue from key amenities you provide to tenants and enhance tenant satisfaction.
3. Bill backs for work order service requests
You may not be realizing full revenue potential if you don’t have a well-designed process to track and bill tenants for all requested billable work as allowed by the lease. This can include everything from changing a light bulb to hanging a TV monitor. Accurate request capture, assignment, and reporting on time, materials, labor costs, mark-ups (margins), and taxes is critical to understanding profit, as is identifying how much service is “comped,” (given away) vs. fully charged for. Again, well-designed property management software should allow you to do this easily and share billable data seamlessly with your accounting system for simplified invoicing.
4. Overtime HVAC
If tenants request overtime HVAC you generally can charge them for that, again as allowed and defined by the lease. Overtime means the request is for after normal operating hours within your building and is a profit center with a lot of potential. We find that after-hours HVAC programs aren’t as efficient as they could be. One of our partners, Genea, offers technology that is specifically designed to track and automatically bill these requests. Their solution handles the whole overtime HVAC process, from a tenant requesting overtime HVAC through their smartphones to fulfilling the request directly with a BMS integration and finally, automating billing for the service. All without the property management team lifting a finger.
5. Submeter billing
Submeter billing is an option to recover revenue for some CRE buildings. The important thing to remember is that profiting off of utility billback is prohibited or limited in some states. There are a number of rules and regulations around sub-metered billing, but you should make sure you are recouping the appropriate costs from your tenants. The most efficient way to do this is to use submeter billing technology from CRE tech providers such as Genea and Aquicore (another valued Building Engines partner). Tools like Aquicore’s automate meter reading, and automatically generate invoices and integrate with accounting systems. This saves property management teams time and streamlines tenant submeter billing – both positively impacting your bottom line.
6. Use of freight elevators
Depending on the type of building you manage, you might also be able to charge your tenants for use of the freight elevators. This option can be overlooked when looking at ways to increase revenue. Tenants use freight elevators with some regularity, beyond just moving in or out, but without systems (and clear policies) in place, to schedule, approve and bill for usage, this revenue opportunity is often missed.
7. Digital and networking services
When a tenant moves in or expands today, there is a lot of technology and digital service work that needs to be completed. IT infrastructure must be set up in their space including cabling, power, Wi-Fi, etc. A relatively new way that you can earn additional revenue is to partner with new companies such as Join to deliver these services. Join partners with CRE landlords to provide a subscription service for all of a tenant’s digital needs. By entering into a partnership with Join, CRE landlords can participate in an ongoing revenue streams and deliver a better-quality service to tenants that gets them in their space and operating faster.
Rooftop leases are still a good source of revenue, but a bit on the decline. That said, the coming 5G revolution might offer additional opportunities to drive incremental revenue here. Landlord-run Co-working space will also create new opportunities. This list is just a starting point to help get you thinking about additional areas of revenue you may not be fully taking advantage of today. Yes, rent is, and always will be, the primary source of revenue, but there may be enough coins hidden under the cushions to make a sizable impact on NOI and asset value.
