How can I improve my net operating income?
• Hold operating costs per leased square foot constant and add renters
• Cut net operating expenses for essential services like janitorial, security, office staff, etc.
• Raise rents with each renewal
Are these practical solutions? First of all, what would draw new renters? Cutting essential services will result in dissatisfaction – without a doubt. Raising rents may or may not work out for you – you always have competition.
Let’s think differently. What if we lower rents per square foot? Can we agree essential services are, well, essential? Your goal is to increase net income. Am I right? I know I am.
One little dirty secret is simply this: unoccupied office spaces have operating costs per square foot. No? Your emergency lights don’t conform to codes? Oh, they do? Then lighting has an associated cost. How about HVAC? Even though you may have an entire floor vacant, there is an HVAC penalty, especially true in multi-floor properties. The higher the building, the higher this penalty due to a variety of factors like stack effect and direct heat transmission through the structure.
The bottom line: if you want your property to perform at peak efficiency, you will want it 100% occupied.
Advancing Challenges to Profitability
Energy makes our world go round. So-called ‘green’ practices may or may not contribute to building operating efficiency. To be sure, operating costs will rise. We can’t counter issues like inflation. Clients must have their office equipment.
For now, electrical rates are relatively low, but economic uncertainty after November 2012 elections will be the “wild card”. I think economic uncertainty is the greatest challenge.
Advantage – Help Available Both Sides of the Meter
In the game of hockey, after a penalty, a player goes to the penalty box to serve his time. Naturally, this leaves his team short-handed. The other team has the advantage and usually executes a “power play” to rack up the score.
Unfortunately, in the usual course of business, it’s the property owner that most often has one of its top players – energy – sitting in the penalty box. In this game, you, the building owner, the investor, are not at disadvantage. Our team can come “onto the ice” with you to put on a power play of our own.
Rockwall Controls Company, Inc. provides relief on both sides of the power meter and we’re ready and able to help you increase your net operating income and the value of your investment.
Both Sides of the Meter
On the load side, through our technical expertise we can offer solutions that reduce energy consumption through a variety of means. On the meter side, we provide energy at the lowest possible cost, along with specialized services.
Do you have the cell phone number of your energy provider? Can you pick up a phone and talk to someone who can answer your questions? No? You’re not alone.
Energy is our business. Are you ready to meet new challenges?
Rockwall Controls is eager to meet with you and evaluate potential strategies to help you on both sides of the meter.
Relief starts with either an email to John@RockwallControls.com or with a call to my office at (972) 771-3514.