Upgrades to The Davis Cos.’ Cityside office complex in Waltham included a new cafeteria, outdoor amenity spaces and high-ceiling open lobby. Photo by Camille Maren | Courtesy
Commercial property owners often wrestle with the question of scale in renovation. Extensive knowledge of the market is a prerequisite that mitigates risk, but there is no guide for commercial real estate repositioning projects that will guarantee an owner’s target return on investment. Although no infallible paint-by-numbers repositioning models exist, it has been our experience that there are, at least, some key factors that are common to successful repositioning initiatives. Adopting a strategic approach to these factors can greatly increase one’s odds of success.
The first factor is the need to develop a repositioning vision bold enough to turn heads. Understand that necessary maintenance work, while certainly an advisable inclusion in a repositioning initiative, should not be viewed as a return-on-investment driver. If your building requires plumbing or electrical updates, undertake that critical work as part of the project, but know that this work is a basic expectation, not a major selling point. Instead, achieving one’s repositioning return is primarily tied to design features that provide a “wow” factor during walk-throughs.
A prime example of this is the Cityside office building in Waltham, in a collaboration between SGA Architects and Connolly Brothers for The Davis Cos. The project involved taking a relatively standard office building and transforming it into class A office space in Waltham, complete with a light-filled cafeteria, an on-site fitness center, a patio offering employees a convenient outdoor option and a high-ceiling open lobby that imparts a sophisticated and stylish vibe to all those who walk through its doors. The Davis Cos. understood that when it comes to repositioning, the phrase “go big or go home” is apt. Merely applying new paint and fixtures to a building that otherwise looks like The Office’s “Dunder Mifflin” may help a bit, but it is important to be realistic: Transformative results are born of transformative measures.
Rebuild on the Fly
Successful repositioning efforts also tend to engage in thoughtful tenant and community outreach, from a clear communications plan for existing tenants to activating supportive community economic development organizations willing to herald the new and improved property’s arrival.
This is where the altruistic instinct to be a good property owner, neighbor and community contributor pays dividends. It is also why it is crucial that you hire a construction manager that understands how to minimize the impact on your tenants, who, when treated with respect and made to feel that they are part of your vision, can be a valuable recruiting tool for new tenants. If it is possible to marry the repositioning project to a larger public narrative about the economic health of the region, that’s even better.
Thaddeus Minshall
Another key factor in repositioning success is the implementation of a concerted marketing push to get the property in front of potential tenants. Engaging the brokerage community by holding an event that encourages them to visit the improved property is a must. Even newly renovated facilities do not sell themselves, so the completion of renovations must not be confused with the conclusion of one’s repositioning work. In short, avoid the “if you build it, they will come” mentality. Instead, be prepared to make a splash with new marketing materials and a strategic distribution plan to get the tenant brokerage community excited as your ribbon-cutting approaches.
None of these tips will enable owners to overcome a flawed concept – a million-dollar repositioning effort in a dilapidated neighborhood remains unlikely to offer desirable near-term ROI – but taken together, a strategic eye on these key commercial real estate considerations may greatly increase one’s odds of repositioning success.
Thaddeus Minshall is vice president of real estate/development at Connolly Brothers Inc.
