20 Aug Great Quality Costs Less
Not all buildings are created equal, even if they look virtually identical when completed. Just as cars have widely different values — although all have four wheels, some doors and air conditioning — so real estate varies depending on how much value is built into it to begin with.
It is not difficult to take raw dirt, put up a building and attract a tenant. But even a very functional, new, attractive building may be of low quality and not worth as much as it appears. Value should always be assessed well into the future and far beyond the immediate price tag. Let’s take a look at some examples of how this plays out.
Imagine that a stock-market driven, “make-returns-this-quarter-and-flip-this-building-next year” type of developer puts up a commercial building in your town. Is he going to consider the many things that continue to give value five years from now? Ten years from now? Is he going to consider the value not just to the owner, but to the tenants? The neighbors? The city?
A short-term investor will gladly choose carpet created to last five years, rather than ten. That means thousands of dollars more, plus hassle, in just a few years’ time for the next owner and tenant. And the cost to society is a used carpet sitting forever in a landfill. The same goes for roofs, asphalt and other items that periodically need to be replaced.
How about landscaping? New trees and bushes make a property pop and give buildings a fresh, inviting look. But what is the long-term cost of those particular plants? Are they water-intensive, placing greater demand on water resources? That’ll cost more over time, for tenants, owners and the community at large. Are these particular plants cheaper to buy? There’s a reason: Cheap plants buckle your asphalt and sidewalks quicker, requiring expensive and unsightly repairs down the road. How about maintenance? How much pruning do they require? Do they shed leaves, fruit or sticky sap on sidewalks and cars? What do they look like in the winter? Are they pollen-producers, creating havoc for people with allergies? Do they interact well with other plants you’ve chosen?
Now consider the building’s functionality. Functionality helps tenants do their jobs well. It includes adequate, convenient parking and warehouse space, a loading dock, office layouts, office sizes, lighting, heat and air conditioning, window choice, elevator location, and much more.
How about aesthetics? How attractive is your building? Form can actually increase functionality. People like to work in attractive places. That means they are less likely to start sending resumes out. Turnover is lower, and so are costs for hiring, retaining and so on. Lower maintenance requirements act the same way. When a building is well-built, it instills a sense of confidence. No one likes having to walk around work crews in the hallway.
The community has to live with your building as well. Are people who drive by, or who occupy neighboring buildings, glad to look at your building? Does it give a sense of community pride and even inspiration? In dollars and sense, does it potentially raise property values around it?
In other words, did you do everyone a favor by building this building, or did you have to slink out of town and hope commercial real estate demand filled it with tenants? Only one creates long-term value.
At INNOVA, we take the long, broad view of value. Our ambition is not to slap together cheap, functional buildings. Anyone can do that, and they get the legacy they deserve. We believe in creating long-term value for owners, tenants, employees, neighborhoods and cities. That means:
— choosing good workmanship and good materials up front. That costs more in the short-term, but less over time. And people appreciate it.
— listening to city managers and planners about their vision for the cityscape. Generally speaking, they really care about the community. Their thoughts are welcome with us.
— looking out for future owners, tenants and employees, rather than sticking them with maintenance and replacement costs that could have been avoided. We’d rather make it easy and enjoyable for people down the line to maintain a property they’re proud of.
— considering the broader community impact with things like water use, environmental impact, building aesthetics, traffic flow, contribution to a pleasing work environment and more. These things create value for entire communities.
Some real estate people speak of a trade-off between return and value. We don’t see it that way. Return doesn’t — or shouldn’t — mean just what you can make quickly on the initial sale of the building. If it does, then you are robbing from long-term value and lining your pockets with it now. Let’s stop seeing return and value as mutually exclusive. Building with good quality, creativity and efficiency doesn’t cost more over time, it costs less. With the long term in view, buildings are constructed with greater value, for longer periods of time, for the benefit of more people.
Water resources https://www.wbdg.org/resources/water-conservation