If you’re a commercial property owner, you’ve probably noticed that the values of your assets have grown significantly over the past few years. Experts anticipate that these prices will continue to rise as demand for commercial space grows. But why are property values so high, especially in Florida? And how can you maximize the value of your commercial property? First, we’ll provide some insight into Commercial real estate in Fort Myers Florida, and around the country. Then, we’ll get into a few ways you can increase the appraisal value of your commercial property even more.
Commercial Property Price Growth Holds Steady
After recently hitting record highs, commercial property price growth is holding steady, according to MSCI. These gains are largely thanks to growth in the apartment and industrial sectors during May 2022. The RCA (Real Capital Analytics) commercial property price indices (CPPI) saw an increase of 18.6% from May 2021. This represented a slight decrease from earlier this year in January, when they recorded the highest annual growth rate of 19.3%. Additionally, industrial prices have increased 1.8% since April 2022 and 28.6% since May 2021, which marks another record annual rate. These record-breaking appraisal values come even as industrial deal volume has dropped for the second month in a row.
The growth in apartment prices has also reached an all-time high; the annual growth rate was 23.3% in May, keeping up with April’s record rate. The CPPI for retail properties jumped 18.8% from last year, while the office sector grew 12.2%. While still a considerable growth rate, the growth pace has slowed for three consecutive months, per the MSCI report.
And experts expect this growth to continue well into the future. Lawrence Yun, the Chief Economist for the National Association of Realtors (NAR), states that the commercial market will continue to thrive despite rising interest rates. “The industrial sector is booming, retail is turning positive, the hotel industry is recovering, apartments are doing very well, and rents are rising in all commercial sectors,” said Yun during the 2022 REALTORS® Legislative Meetings’ Commercial Economic Issues and Trends Forum. He also notes that, due to the residential housing shortage, apartment rents are expected to increase over the next two years by more than 10%.
Florida is One of the Country’s Hottest Commercial Markets
Florida has quickly become one of the country’s hottest commercial markets, making this a great time to invest in commercial real estate in Fort Myers Florida. According to NAR’s recently released 2021 Q4 Commercial Real Estate Metro Market Reports, Florida cities account for nine of the top 15 commercial real estate markets in the United States. NAR made a Commercial Real Estate Market Conditions Index to compare a region’s overall conditions to national conditions. The index shows trends in a multitude of commercial sectors in 390 metropolitan areas and is based on specific commercial market indicators, as well as economic and demographic conditions.
Here are the top 15 areas with the strongest overall commercial real estate markets compared to national conditions.
- Charleston, South Carolina
- Durham, North Carolina
- Fort Myers, Florida
- Jacksonville, Florida
- Kennewick-Richland, Washington
- Miami, Florida
- Naples, Florida
- Nashville, Tennessee
- North Point-Bradenton-Sarasota, Florida
- Orlando, Florida
- Olympia, Washington
- Palm Beach, Florida
- Port St. Lucie, Florida
- Seattle, Washington
- Tampa, Florida
As such, it’s no surprise that commercial property values are on the rise. Commercial real estate brokers in Fort Myers can assist you with finding commercial property for sale in Cape Coral and other areas throughout Florida.
How to Increase the Value of Your Commercial Property
Though commercial property values are trending upwards, there are always ways you can make your property stand out to increase its value and facilitate a quick sale. To add value to your commercial property, you must take steps to improve its physical condition. Here are some methods for making that happen:
- Improve the property’s appearance. First impressions count, so make sure yours is a good one. Boost the curb appeal easily by keeping landscaping manicured and buildings clean. Consider making other cosmetic changes, like painting, new flooring or carpeting, or adding new decor.
- Add more amenities to the property. These may include something as simple as creating a playground on multifamily property, or you can add more extravagant amenities like a daycare center in your office building.
- Increase the rent if a markup is reasonable and justifiable. Review the historical data for a property, looking for trends in rental rates and how long units remain vacant. Determine if improvements can justify a rent increase. Remember that rents should be comparable to rents charged for similar properties in the area; if your rent is significantly higher than rents charged for nearby properties, tenants may not find your property attractive.
- Reduce your expenses. Evaluate the operating systems of the commercial property to determine if there is any way to limit expenses. For example, you could add energy-efficient light bulbs and features in common areas to reduce your monthly electric bills. In most cases, you can cut costs without significantly impacting operations.
- Change the use of the property to open up more opportunities and increase the appraisal value. For example, you can obtain a zoning variance to convert an old warehouse into a hotel, apartment complex, or office building.
The trend of increasing commercial property values is good news for those who have their own business and invested their money in Commercial real estate in Fort Myers Florida, as well as for anyone looking for Commercial property for sale in Cape Coral. Commercial property prices are only rising– especially in sectors like apartments and industrial properties –and these trends are only expected to continue. It’s essential to understand the current state of commercial real estate and whether or not you have a valuable asset on your hands. We hope you enjoyed this detailed look at the current state of the commercial real estate market and a few actionable tips you can apply to your own property.
If you have any questions about your commercial property, please contact one of our Commercial real estate brokers in Fort Myers today!