Find New Sources of Rent, Income in Hidden Leasable Areas

Whether the real estate market is weak or strong, it's always the right time to look for new ways to generate more rent and income. There may be hidden leasable areas in your building or center right now that you could easily convert into new sources of rent and income. You can find hidden leasable areas in many parts of a building or center—from otherwise “dead,” seldom used, or underused areas that you could convert into something more useful and desirable, to often-used parts of common areas that you could rent or license for a limited time for a special event.

With the help of real estate experts Kevin M. Fogel, Peter D. Morris, and Richard M. Muhlebach, we've put together a checklist of 15 strategies to generate more rent and income at an office building, and 16 strategies to generate more rent and income at a shopping center, by simply finding the hidden leasable areas at your building or center.

Checklist of Additional Income-Generating Strategies

Here's a checklist of strategies for generating more rent and income from hidden leasable areas. Our checklist is divided into two main categories—“Office Buildings” and “Shopping Centers/Malls.” Within those categories are lists of hidden leasable areas: in a building's/center's interior areas, parking lot, and on its rooftop. Review the checklist and determine which of these additional income-generating strategies would work at your building or center.

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Practical Pointer: It's vital that your building's or center's property and liability insurance policies cover the types of activities included in our checklist of additional income strategies, notes Fogel. Otherwise, your good intentions to simply generate additional income could result in a very costly lawsuit if someone is injured or if property is damaged during any of these activities, he warns.

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I. Office Buildings

Interior Areas

• * Convert dead, unused areas into storage areas, and charge a fee for storage.

• * Place vending machines in dead, unused areas, and get a percentage of the money the vendor collects from the machines.

• * Convert a seldom used area into an amenity room or employee gym, and charge an annual fee for access.

• * Rent unneeded space in a large lobby to a candy or newsstand vendor.

• * Let a TV or movie production company film in the building for a fee.

• * Install pay phones and collect a fee for every call made.

• * Create Wi-Fi hotspots and get a commission from the vendor.

• * Install Internet-accessible computers and charge users for access/connection time.

• * Install ATMs and collect a fee for every transaction.

• * Install small, flat-screen TV monitors in the elevators (and larger monitors throughout the building), and charge tenants for ads promoting their businesses located within the building.

Parking Lot/Garage

• * Charge a fee for a car wash or car detailing operator to use the parking lot or garage a few days a week or longer.

• * Charge a nearby facility to use your building's parking lot or garage after hours.

• * Open a self-paid area of the parking lot or garage to the public on weekends.

• * Create a pad, or an outparcel, in the parking lot, and rent it to a new tenant.

Roof

• * Rent the building's roof space to telecommunications providers for their antenna (and interior conduits/risers for their wiring).

II. Shopping Centers/Malls

Interior Areas

• * Rent or license vacant spaces to temporary tenants/licensees—such as H&R Block during tax season, or a Halloween costume store in October.

• * Rent out space in a less traveled area as a community room for fund-raisers, service club affairs, or town meetings.

• * Place carts under the mall's escalator, and charge a fee for third parties or tenants to fill them with merchandise for sale.

• * Enlist corporations' help in sponsoring an area of the mall—such as the food court—for a fee.

• * Install soft-drink vending machines in the common areas, and get a percentage of the money the vendor collects on every drink sold from the machines. (You may have to grant an exclusive to one bottler).

• * Let a TV or movie production company film at the center for a fee.

• * Install pay phones, and collect a fee for every call made.

• * Install and collect fees for children's rides (such as a motorized horse) and arcade-type machines in appropriate areas. Make sure that the machines' noises won't disturb other tenants, and that the machines won't obstruct adjoining businesses' entrances or exits. Also make sure that such machines don't violate any of the tenants' exclusive use rights.

• * Rent large, open areas in the center or mall to artists, musicians, and performers.

• * Install Internet-accessible computers, and charge users for access/connection time.

• * Install ATMs, and collect a fee for every transaction.

• * Hire a directory company to sell ad panel space on the center's directories, and get a percentage of the money from the ad sales.

• * Install large, flat-screen TV monitors throughout a food court, and charge tenants for ads that promote their businesses located within the center.

Parking Lot/Garage

• * License an area in the center's parking lot for amusement rides, boat sales, book sales, Christmas tree sales, a farmer's market, fireworks stands, a Halloween pumpkin patch, new- or used-car sales, a traveling circus, or other special events or sales.

• * Create a pad, or an outparcel, in the center's parking lot, and rent it to a new tenant.

Roof

• * Rent the center's roof space to telecom providers for their antenna (and interior conduits/risers for their wiring).

CLLI Sources

Kevin M. Fogel, MSRE: President, KMF Property Group, Inc., 49 Irma Dr., Oceanside, NY 11572-5715; (516) 536-5881; kfogel@kmfpropertygroup.com.

Peter D. Morris, SCSM, SCMD: Vice President of Retail for North America, Colliers Macaulay Nicolls, Inc., 1175 Douglas St., Ste. 1110, Victoria, BC Canada V8W 2E1; (250) 414-8383; peter.morris@colliers.com.

Richard F. Muhlebach, CPM, SCSM, CRE, RPA: Senior Managing Director, Kennedy Wilson Properties, 301 116th Ave., SE, Ste. 100, Bellevue, WA 98004; (425) 453-2500; rmuhlebach@KennedyWilson.com.