Commercial Real Estate

CRE Opinion: The Benefits of Tasteful Rebranding

Owners and purchasers continue to look for ways to upgrade buildings in a way that will push rents up and give tenants the feel of being in a newer building.

It is hard not to catch yourself eyeing the Dallas skyline these days to marvel at the landscape being created or to see the new developments that have just come out of the ground! The material quality, upscale design and interiors, and financial performance of Class A buildings that have been developed in this cycle are pushing record sales prices in multiple submarkets. Investment in top-of-the-line product is paying off big time for owners and purchasers alike. The product has induced a so-called “flight to quality” as companies seek a vehicle with which to heighten their brand above the competition, enabling them to attract and retain millennial talent by showing they value what workplace features are important to employees. Owners of existing Class A product likewise have been investing millions into upgrading their properties.

Susan GwinBurks

For the mature Class B product that is already on the ground, owners and purchasers continue to look for ways to upgrade the assets in a way that will push rents up and give their tenants the feel of being in a newer, more modern building. Rebranding allows owners to retain their tenants, improve occupancy and move pricing toward a successful exit strategy. Tasteful rebranding can offer something for every asset in the mix, no matter the size. For smaller assets, we have seen lobbies transformed by installing electronic directories, resetting plants in contemporary planters, and adding splashes of color through new artwork and area rugs. On larger assets, daring and bold renovations can completely and miraculously transform a building. Lobby staircases can be removed to make room for community areas that promote collaboration. Adding tabletop seating and focal point light fixtures can turn a formerly useless space into a tenant amenity. In most cases, tenants feel they are getting more bang for the buck and are more amenable to accept rent increases when renewing. Tasteful rebranding can, in most cases, move the needle quite significantly on disposition pricing.

While no one truly knows which extra inning the cycle is in at this point, what we do know is that investors are bullish on Dallas-Fort Worth and tenants continue to demand high-quality finishes and on-property amenities. Investors and tenants alike see the abundant and skilled labor market, demographic growth year-over-year with robust predictions and pricing that still encourages them and signals abounding upside. To capitalize on this optimism, owners of older properties can rebrand and revive these assets to retain tenants and get the highest return on investment.

Susan GwinBurks is a senior vice president for the Dallas-Fort Worth office of Colliers International.

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