31 Ways to Add Value to Commercial Real Estate Investments
Value-add commercial real estate investments are hands down my favorite approach to buying commercial real estate.
This strategy, which is often called the BRRRR method, is great.
It allows you to buy undervalued properties, fix them up, and significantly increase the value to a point where you can refinance all of your cash out (and still own the property!) or cash flow it like crazy.
Here are 31 ways to add value to your next commercial real estate investment.
Physical Improvements
Renovations and Upgrades: Enhance the property's aesthetics and functionality through renovations, modernizing amenities, and upgrading systems like HVAC and lighting.
Exterior Enhancements: Improve curb appeal by refreshing the facade, landscaping, and signage, attracting more tenants and customers.
Energy Efficiency Initiatives: Implement energy-efficient measures, such as solar panels, LED lighting, and smart building technologies, reducing operational costs and attracting environmentally conscious tenants.
Accessibility Improvements: Make the property ADA-compliant and accessible, catering to a broader range of tenants and customers.
Facilities Expansion: Consider adding extra square footage or additional floors to maximize rental space and increase revenue potential.
Repositioning: Reposition the property for a new market segment, such as converting an industrial building into creative office space or repurposing retail space for mixed-use development.
Common Area Upgrades: Enhance common areas like lobbies, elevators, and restrooms, creating a more inviting and modern environment for tenants and visitors.
2. Operational Improvements
Effective Property Management: Optimize property management practices to reduce vacancy rates, improve tenant retention, and increase overall property efficiency.
Lease Restructuring: Analyze lease terms and conditions, and negotiate with existing tenants to optimize lease structures, rent escalations, and long-term commitments.
Tenant Amenities: Provide attractive amenities like fitness centers, conference rooms, and communal spaces, which can attract and retain tenants.
Efficient Space Utilization: Optimize space utilization within the property to accommodate more tenants or create flexible, multi-purpose areas.
Building Maintenance: Implement preventive maintenance programs to prolong the property's lifespan and reduce costly repairs.
Sustainable Practices: Adopt sustainable practices, like recycling programs and water-saving measures, to attract environmentally conscious tenants and reduce operational costs.
Safety and Security: Enhance security measures, including surveillance systems, access control, and safety protocols, ensuring a safe environment for tenants and visitors.
3. Financial Improvements
Cost Segregation: Utilize cost segregation studies to accelerate depreciation and increase tax deductions, reducing overall tax liability.
Expense Reduction: Analyze operating expenses to identify cost-saving opportunities, negotiate contracts, and seek competitive bids from service providers.
Tax Incentives and Abatements: Take advantage of available tax incentives and abatements provided by local governments for certain types of investments or developments.
Capital Expenditure Planning: Plan and budget for capital expenditures over time to avoid unexpected financial strains.
Rent Optimization: Regularly review market rental rates to ensure competitive pricing while maximizing rental income.
Value-Add Leasing: Lease vacant spaces or re-lease expiring spaces at higher rates after implementing value-add improvements to the property.
4. Market Positioning
Targeted Marketing: Employ targeted marketing strategies to reach potential tenants and showcase the property's unique features.
Diversification: Diversify the tenant mix to reduce reliance on specific industries or businesses, minimizing risk.
Branding and Identity: Establish a strong brand identity for the property, creating a unique market position and increasing its visibility in the market.
Community Engagement: Engage with the local community through events, sponsorships, and partnerships, enhancing the property's reputation and tenant appeal.
Market Research: Continuously monitor market trends, demographics, and demand to make informed decisions that align with the evolving market.
5. Financing Strategies
Refinancing: Periodically assess refinancing options to take advantage of lower interest rates or access additional capital for improvements.
Value-Add Investment Partnerships: Consider value-add partnerships with investors who specialize in enhancing properties for increased returns.
6. Exit Strategies
Property Portfolio Optimization: Assess the property's role within your portfolio and consider selling assets that no longer align with your investment strategy.
1031 Exchange: Explore the option of a 1031 exchange to defer capital gains taxes when selling and reinvesting in a like-kind property.
7. Sustainability Initiatives
Green Certifications: Obtain green certifications like LEED or ENERGY STAR to attract environmentally conscious tenants and qualify for additional incentives.
Renewable Energy Integration: Integrate renewable energy sources, like solar panels, to generate electricity and reduce utility expenses over time.
Examples of Upgrades to Commercial Property:
Travis Drive
Here’s an example of a property where we performed a value-add renovation. This 12,070 square foot office building was almost completely vacant (less than 1,000 sq. ft. occupied) and we upgraded the following:
painted the interior and exterior
resealed and striped the parking lot
upgraded interior and exterior doors
added hardscaping and landscaping
LVP hardwood flooring
new restroom and kitchen fixtures
LED lighting
smart sensors for lighting / HVAC
This office building was much nicer than other spaces available in the market and because we were able to buy it cheaply (due to the vacancy), we were able to offer it at our competitor’s rental rates. All 17 spaces were leased up in 6 months and we sold the building for 36% higher than our all-in cost after 16 months.
The Ellwood
This 28,000 square foot office building was nearly 40% occupied when we acquired it in 2019. The leasing program was off, asking rates too high, the property was in need of some serious updating, and the leases were all over the place.
Upon takeover, we immediately engaged Parasol Property Management to handle the asset, re-did all of the restrooms and common areas, added tenant directories, added security cameras, implemented LED lighting and controlled HVAC (both had a significant impact on decreasing our electric costs), and prepared a new lease for tenants taking space in the building.
Since then, the property has achieved over 90% occupancy, despite the pandemic and the apparent “office apocalypse” and operations have run significantly smoother.
If you’ve been investing for a while, you know the grind.
You’ve closed deals, managed contractors, worked through leases, and seen both wins and setbacks. Maybe you’ve owned single-family rentals, a few duplexes, or even some small commercial buildings. You understand the fundamentals: how to run numbers, navigate debt, and keep properties occupied.
But here’s a question that hits at a different level: are your investments giving you leverage or just more responsibility?
As your portfolio grows, so does the complexity. More tenants often mean more phone calls. Bigger buildings bring additional systems, staff, and liability. And while your equity might be growing on paper, your time can get stretched thin across too many directions.
That’s why more experienced investors are quietly shifting toward asset classes that offer something rare in commercial real estate: simplicity that still delivers strong returns.
Two of the most overlooked categories in this space are flex industrial and industrial outdoor storage (IOS).
They’re not flashy. You won’t find them in luxury investor decks or high-end brochures. But these properties produce solid returns, attract long-term tenants, and are surprisingly light on operational headaches. Best of all, they give seasoned investors a way to keep growing without being consumed by the demands of their portfolio.
In this post, we’ll walk through:
What makes flex and IOS so attractive
The numbers behind why they work
How they fit into a growing portfolio
And why they might be the most strategic asset class you haven’t explored yet
This is not about going bigger for the sake of scale. It’s about going smarter.
Because the goal is not more units. It’s more freedom.