How Building Upgrades Can Make Real Estate Companies More Competitive

Building improvements require capital, but their long-term benefits outweigh their costs with adequate planning and design. The reasons to carry out building upgrades range from making the property safer to conserving energy and water. However, real estate companies get an additional benefit from upgrading their buildings: making them more attractive for tenants.

Buildings are often upgraded to keep up with local legislation and codes. However, these are mandatory requirements that all real estate companies must meet. A building can stand out among similar properties by providing features that exceed the minimum requirements.

Installing Automatic Sprinkler Systems

Automatic sprinklers are among the most effective fire protection measures since they stop many fires when they are still small. Movies have created a wrong image of fire sprinklers, showing scenes where they shower a building interior with the smallest sign of smoke. However, fire sprinklers do not work like this in real life:

  • Fire sprinklers respond directly to heat, not smoke. While smoke may set off alarms, it will not activate the sprinklers by itself.
  • Only the sprinklers directly above a fire activate, responding to the hot air.

Sprinklers offer automatic and localized fire protection, and they will not shower unaffected areas. Only sprinkler systems of the deluge type operate as depicted in the movies, but they are used exclusively in fire-sensitive applications, such as storage areas for flammable materials.

Even if a building never uses fire sprinklers in its entire service life, they bring two key advantages for real estate companies. Buildings with fire sprinklers can get better coverage plans from insurance companies, and the fire protection offered can help convince potential tenants.

Using Energy Efficiency for Real Estate Marketing

Energy efficiency measures can save thousands of dollars on electricity and gas each month. Since tenants don’t own the spaces they use, there is little incentive for them to invest in energy efficiency. However, efficient buildings can attract tenants more easily, since they can expect to pay less for electricity and gas.

Space heating and air conditioning are normally the largest energy expenses in commercial and residential buildings. Lighting costs are smaller but also significant, especially in buildings with common area lighting that operates continuously. If a building is equipped with LED lighting and efficient heating and cooling systems, real estate companies can point this out when negotiating a lease. Tenants will associate these technologies with reduced energy expenses, and they are more likely to sign.

Renewable Energy Systems in the Real Estate Business

The cost of renewable energy systems has decreased rapidly in the past decade, making them a viable option for buildings. For instance, the ownership cost of a solar power system will normally be much lower than the total cost of the electricity it saves.

Renewable generation also lowers the emissions produced by a building, especially if it reduces dependence on a power grid that uses fossil fuels. Tenants who give high priority to environmental factors will likely prefer to rent spaces in a building that uses clean energy. Consider that clean energy can also boost the public image of a real estate company.

Solar power systems are a common option for both residential and commercial buildings. Thanks to their modular design, solar panels can adapt to projects of any scale: you simply need to determine the optimal amount of panels according to energy needs. Depending on site conditions, wind power and small-scale hydroelectricity may also be viable.

Conclusion

Real estate companies get additional advantage from building upgrades that improve safety or energy efficiency. These features can be used for marketing since they help attract potential tenants. If two buildings have identical construction, the one that provides added value will win over more tenants. For example, a building with fire sprinklers, LED lighting, and efficient HVAC systems will tend to be preferred over an identical building without these features.

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