Interest rates at generational highs have caused a steep reduction in transaction volume for commercial real estate.  Most owners are planning for few if any new acquisitions over the short to midterm, and this is particularly true for institutional owners of commercial real estate.  Smart owners are utilizing this slowdown on the acquisition front to focus their energy on maximizing value in their existing portfolio.

There's no shortage of work to be done; the question is where to begin and how to prioritize. Below are seven places you can start to add value to your property.

1. Pull out your PCA. The property condition assessment (PCA) performed at acquisition contains a long-term cost table of anticipated maintenance for specific physical components of the property for a defined term from the date of the assessment (typically 7 or 12 years).   If you've held a property beyond that term, or if you have any material maintenance issues at the property, you may want to order an updated assessment to capture changes to the property since acquisition.  With this report, you have a list of what building systems or components that may need your attention.
2. Catch up on deferred maintenance. Protect property value and improve tenant experience by completing deferred maintenance tasks such as parking lot sealing, storm drain clearing, and HVAC servicing. Make small repairs before they become significant problems. If you don't already use one, consider implementing a proactive management system to stay on top of maintenance tasks and prolong the life of your building systems.  In addition to the long-term cost table in the PCA, there will also be an immediate repairs and deferred maintenance table. These are items that required immediate attention at the time the PCA was written so they should be a top priority, and they are the first things that potential buyers will be looking for.
3. Evaluate and execute capital expenditures as needed.  If building systems are reaching their expected useful life, establish a plan for replacement. Supply chain issues still exist, so ordering replacement materials early could be beneficial. If your firm has efficiency/sustainability goals in play, consider upgrading to more efficient or sustainable models at the time of replacement, which is generally the most cost-effective time to upgrade.  Economies of scale may come into play if you own a portfolio of assets with similar capex needs.
4.  Address compliance and regulatory issues. Between federal, state, local, and industry regulations, there are always compliance matters to address. For example, many owners of California multifamily properties are implementing plans to comply with SB721, the "balcony law" that requires routine inspections of elevated exterior elements. If you have green financing on an asset or if your asset is in New York City, you may be required to benchmark energy consumption. Review applicable regulatory obligations and use this slow period to achieve compliance wherever possible.
5. Keep your tenants happy. Retain existing tenants and attract new ones by sprucing up or adding amenities that make sense. Refresh landscaping.  Clean and update common spaces. Compare your building to area competition and determine how you can step up your game: do you need electric vehicle charging stations?  A fitness center onsite? A concierge service? Talk to your appraiser about what the current comps in the area look like—what do they have that your property doesn't?  What amenities generate the most value?
6. Look for additional revenue sources. In a competitive market where there isn't much play in rental rates, creative asset managers find alternative income sources. Are you maximizing revenue from rooftop tenants, including solar and telecom? New technologies for multifamily and office properties allow some landlords to offer (and monetize) turnkey internet services for tenants, a win-win that often results in better service for less cost to tenants. Consider ordering a Building Technology Assessment to identify cost reduction and revenue opportunities that you may have missed.
7. Don't forget ESG. If you made ESG commitments during fundraising, take this opportunity to focus on efficiency, sustainability, and/or resiliency. An ESG Benchmarking Assessment helps you understand how your property is performing against your chosen ESG framework or goals. A resiliency assessment examines your exposure to climate-related risks and identifies opportunities to minimize it. This may be an ideal time to address ESG goals that were not a priority in the past.

If you've been through a few cycles, you know that it's just a matter of time until the market changes. Investing in your assets now will position them for best outcomes in the future.