Adding value with capital improvements

By Megan Padilla; photos Chad Baumer

Updated 10/23/23; Originally published 3/12.20
Commercial property owners and investors are always weighing where to invest next: build new or improve what’s already in hand? Rising construction costs are driving owners to invest in their high-value projects situated in the best locations. Capital improvements increase a property’s value and attract more interest and better tenants. 

Capital improvements primarily focus on elevating and refreshing public spaces such as lobbies, hallways and restrooms. These days, owners of existing Class A office space are competing for top tenants who are enticed by sleek, new ground-up builds. 

Other companies, such as net lease REIT W.P. Carey, Inc., seek capital investment opportunities in order to preserve the longevity of their assets and to provide high-quality amenities to their long-term tenants. “Although we have very high occupancy rates at 98.8%,” says Charlie Stocks, W.P. Carey vice president, head of project management, “these types of investments are equally as critical in vacant assets in order to successfully secure future tenants.”

As part of W.P. Carey’s commitment to long-term relationships, “We also work with tenants on expansion and follow-on build-to-suit projects, which enable tenants to expand or construct a new facility custom-built to their needs with no upfront capital or equity required.” The ideal outcome of capital improvement projects focusing on existing tenants, says Stocks, is an extension of the tenant’s lease, “signifying our commitment to being a long-term partner to our tenants and to ensuring they have the real estate they need to meet their business objectives,” — as well as an improvement to the overall quality of the asset.

Other areas for capital improvement

In addition to common spaces to renovate, such as lobbies, amenity areas and parking lots, Stocks says W.P. Carey also invests in “improving the energy efficiency of our buildings through lighting upgrades, solar panel installations and other sustainability retrofits; and adding value to vacant properties through redevelopment and repositioning opportunities as a part of our re-leasing strategy.”

To stay competitive, owners often go beyond the lobby to offer engaging lounge spaces — indoors and out — as well as other quality-of-life perks such as onsite gyms and improved parking. Interstruct recently completed extensive site work to bring a creative idea to life for Lincoln Property Company in a business park setting off South John Young Parkway.

LPC envisioned a food truck and outdoor park-like area complete with seating, shade and landscaping to provide an enticing lunchtime solution for tenants’ employees at Southpark Center.

 

In another Orlando project for LPC, Interstruct interceded on a single-tenant building by demolishing and rebuilding the lobby. “Our major intervention allowed the building to be repositioned and sold as a multi-tenant building,” said Interstruct CEO Ryan Young. This is a good example of a commercial real estate company investing in capital improvements in order to sell the asset at a higher cost, yielding greater profits. 

The decisions of when, where and how much to invest is usually made before clients bring the project to Interstruct, says company president Matt Coticchio who heads up the Tampa office. The main questions they ask Interstruct regarding their capital improvements are: “How much will it cost?” “How long will it take?” and “What kind of disruptions will there be to current tenants?” 

Interstruct always has a great handle on the answers to those questions, says Coticchio. As with any repetitive task that results in expertise, interior build-outs of Class A commercial space are part of Interstruct’s DNA. It’s the type of construction work that founded the company in 2001. 

Rich Monroe, Interstruct’s COO based out of the Orlando office, underscores the company’s ability to manage a project using the prototype established from many similar projects. 

“We operate and exist to do the best possible project that we can and to be an expert in the field that we are working in and to use our experience to benefit our client,” adds Monroe. 

Learn more about how we can streamline your entire project with our design+build methodology. 

See Interstruct’s recent capital improvement work

W.P. Carey Lobby Renovation
Location: St. Pete, Florida
Partners: W.P. Carey, CBRE and architecture and interior design firm Ai Collaborative.
Completion: 2020

The lobby’s metamorphic new look features a glass curtain wall, soaring ceiling and statement staircase. The transformation was recently completed with high-end finishes including porcelain floor tile with flat Schluter tile edge trim throughout. Uptown Walnut laminate wall and 3D  Modular Arts paneling provide dramatic appeal. New staircase stainless steel railing, LED lighting with a Vibia–Halo pendant feature (suspended over a new centerpiece reception desk) finishes off the look of this commercial office building project in the Tampa Bay area. 

W.P. Carey’s Charlie Stocks shared some insight into the transformation of this asset located at 11101 Roosevelt Blvd. in St. Petersburg, Florida. “It is a critical part of our operating portfolio, and was previously challenged with a lower-than-market parking ratio and an outdated lobby. The building located on the lot adjacent to the office building, which we also own, was vacant and we made the strategic decision that we would extract more value out of 11101 Roosevelt by demolishing the building on the adjacent property and constructing a new parking lot in that space. In addition, we did a full renovation of the lobby to add further value to the property. We’ve been met with positive feedback from the market on these improvements and are confident that our capital investment projects will enable us to secure a long-term tenant for the 60,000 SF of vacant office space in the building.”

W.P. Carey Sitework + Parking Lot
Location: St. Pete, Florida
Partners: W.P. Carey, CBRE and architecture and interior design firm Ai Collaborative.
Completion: 2021

This parking lot was part of the larger capital improvement project we completed for the W.P. Carey building in St. Pete. First, the magnificent 2019 lobby transformation. Next, we replaced the adjacent eyesore – a dilapidated former government-owned building – with an excellent parking solution for tenants. High function that looks good too.

The challenges included plenty of unforeseen objects below the previous building, and a transformer in the parking lot that was the oldest one onsite and had adjacent buildings being fed through it. We were able to find creative ways to solve both issues without missing any of our marks.

This project was completed in 2021 in partnership with W.P. Carey (NYC Based REIT), CBRE (Tessa Jennings) & Langan Engineering (Andrew Eiland).

Highwoods at One Harbour Place
Location: Tampa, Florida
Partners: Highwoods

Interstruct is pleased to see how well the high-end finishes at Hightwoods at One Harbour Place on Harbour Island in Tampa have held up. Completed some time ago, the lobby, restrooms and corridors remain  brightened up this Tampa office tower with a sleek, modern look. 

Bayside Center 1 and 2
Location: Clearwater, Florida
Partners: Cushman & Wakefield

Beautiful marble, tile and 3form panels were used to refresh all of the lobbies, corridors and restrooms of Cushman & Wakefield’s Bayside Building 1 and 2, Class A office space. 

Additional New Projects

MetWest One
Location: Tampa, Florida
Partners: Cushman & Wakefield
Photos: Richard Alan Photography

This is a 2023 multi-floor restrooms renovation project for Cushman & Wakefield at MetWest One in Tampa.

We Work Lobby Renovation 
Location: 501 E. Kennedy, Tampa, FL
Photos: Richard Alan Photography

Interstruct Tampa was the GC on this capital improvement top-to-bottom lobby renovation, fully realized with specialized materials and very high-end finished carpentry and metal work as well as newly installed terrazzo floors.