The wide supply gives (potential) tenants of professional real estate such as offices and retail properties the opportunity to be more choosy. Therefore, when properties are due for a sustainable (total) renovation, owners have to choose: renovate, "buy time" or sell. Not only sustainable(er) techniques, but also changing needs due to home improvements, among other things, can be determining criteria. Ingenium can help make the right choice in the short and long term.
Tenants in the professional market seek maximum comfort for their employees at the lowest possible rent and operational cost. Both financial aspects in particular can weigh heavily in the trade-off between various properties. The energy crisis has put things even more on edge.
Revenue and expenses
The value of a building is in correlation to its rental income. Let us take as an example a building A that is well insulated and in peak condition, and a building B in a much less good condition. If at A the cost per m2 is 100 euros and the rent is 1,000 euros, the property will be put on the rental market at 1,100 euros/m2. However, if at B the cost per m2 is 300 euros, only 800 euros rental income remains if the rental price remains the same. The landlord of property B is thus at a disadvantage both in the short term - rental income per month - and in the long term.
The tenant's move
Now it seems as if, with the same rent, the tenant will only base his choice between A and B on other aspects, such as location, total surface area, accessibility, etc. However, if, as in the past year, energy prices rise sharply, the operational costs for the tenant of building A rise sharply. Anyone about to change locations or looking to rent a location for the first time will obviously not choose a property that scores poorly in energy terms. And a tenant with a current lease will do everything possible to stay within the established budgets. With rising operating costs, there may then be a demand to revise the rent downward. In either case, the owner of Building B in the example draws the short straw.
Moreover, companies that rent premises must increasingly demonstrate that they operate in a green, sustainable manner, and these premises obviously play an important role in this. So for the landlord, obtaining a sustainable label is an asset because it makes the leased building more attractive - read: fetch a better price - on the market. And at the same time, the sustainable investments increase the long-term value of the building.
It may be clear: the tenant's move is today, because there is plenty of choice. But at the same time, the owner should not sit idly by and better anticipate the future.
Brussels office market (partially) in need of replacement
Many office buildings in the Brussels region were built 15 to 25 years ago with the intention of selling them immediately upon completion. Obviously, the main objective was not to build a sustainable building. However, this is precisely why today's owners are ready for major investments and the choice of stay-stretch-leave. It is a smarter choice to analyze the situation thoroughly and, if necessary, to invest in truly sustainable solutions for the long term.
Want to know more about this project and/or the possibilities to make your project sustainable? Contact our expert Sébastien Belpaire: sebastien.belpaire@ingenium.be - 050 40 45 30.
