Thursday, April 18, 2024
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HomeA View From The TopHow to Drive Property Value with In-Building Wireless and Telecom

How to Drive Property Value with In-Building Wireless and Telecom

Today, commercial real estate owners are racing to provide the latest and greatest amenities to a tenant pool that has more options than ever before. While it is possible for a CRE owner to entice tenants with dog-friendlier, more Google-fied options, bells and whistles like free lattes, and common areas with couches and game rooms, these offerings have become table stakes and are simply not enough to stand out in today’s marketplace. In order for CRE owners to maximize building occupancy, they need to consider offering unique amenities such as high-quality telecom infrastructure that is designed to increase rental rates, get tenants moved in faster and make better use of CapEx and TI dollars — all while driving fully qualified income to the building’s NOI.

While this sounds like a tall order, it’s not impossible. In fact, I’ve broken down how you can increase your building’s property value through telecom in three easy steps.

STEP #1: BUILD A BETTER MOUSETRAP

Great properties are not built without meaningful investment. When it comes to your building’s fiber backbone, you need to think of it the same way you would about your body’s actual spine — you want it to be as healthy and strong as possible. And, you should be willing to do anything to protect it.

Now, other ISPs may believe in the least capital-intensive network builds, but I view this how a real-estate owner and operator does … like any other capital project. Through that lens, it makes perfect sense to invest in quality infrastructure. With a well-designed in-building fiber and wireless network, property ownership will never need to upgrade their telecom backbone. Fast-forward a few years and this back-bone will be able to accommodate every future wireless service: DAS, CBRS, 5G, BMS, occupancy sensing, security and more. This approach can result in average tenant savings of $0.05-$0.30 a square foot per month, driving up lease rates while simultaneously offering more competitive net effective rent. Here’s the bottom line — 100% of this investment can be fully capitalized during a sale.

STEP #2: INTEGRATE.

So, how does a backbone investment drive leasing and rental rates? As a CRE-derived ISP, we made the business decision to invest up-front in a better network. This technology allows us to offer standard one- to two-day installation times, compared with 30-90 days for competitors. A couple of days sure beats a couple of months by a wide margin, right? After all, the sooner tenants can move in, the sooner the property can start to collect rent. Remember — the true value in your in-building wireless system comes from driving the net effective rent.

Additionally, property ownership can then leverage your capital plan to build attractive spaces that more tenants will find useful. Not all tenants have the capacity or resources to build their own living rooms or ping-pong areas. With 5×5 Telecom’s Connected Square Footage™, a patent-pending technology that allows employees to work on their office’s network anywhere throughout the property at the same speed and security as in their offices, CRE owners can build spaces that become more socially engaging and ultimately make the tenant’s tenant improvement dollars go even further. Connected Square FootageTM allowed the property to transition from talking about the cost per foot to the cost per employee. After all, who cares where team members are working if they’re happy and working securely and collaboratively wherever they want to work, whether that’s the coffee shop, gym, restaurant, bar or patio?

STEP #3: HARVEST OR SELL.

As a GP in more than $1 billion of commercial real estate, I always want to maximize the value of the project — not shrink the prospective buyer pool at a sale. With this approach, you can produce REIT-compliant revenue and avoid haircuts to cap rates for non-rent income. At a 5-cap, a portion of five to 30 cents per square foot begins to add up quickly!

Marc Gittleman is CEO of 5×5 Telecom, the West Coast’s fastest-growing Internet Service Provider and Voice Over Internet Protocol (VoIP) company that specializes in partnering with CRE to offer the fastest and highest-quality internet services at affordable prices. The company has recently added close to 2.6 million square feet of projects and has an active pipeline of hundreds of upcoming projects in cities across the U.S. in and around Southern California, Chicago, Dallas, Denver and New York.

5×5 Telecom combines the highest level of service and value with industry leading one- to two- day installations as standard, as well as its Connected Square Footage™ platform that allows users to work on their own office networks any-where throughout their property.

To learn more about how you can drive value at your project, email Marc at marc.gittleman@5x5tele.com.

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