Does your building generate maximum revenue with minimized expenses for a high NOI?
To maximize building profitability, it’s essential to have a high NOI. That way, you generate as much revenue from your building as possible. All while keeping your expenses down and encouraging team productivity.
But, improving NOI doesn’t just make your building more profitable. It can also increase tenant satisfaction. When your building runs efficiently, tenants have a better experience due to things like better vendors, great service, and an always comfortable environment. This means they want to stay in your building – ensuring a steady revenue stream.
So, improving NOI can help you increase your revenue, cut operating expenses, and make tenants happier.
How can improving NOI impact these areas? Read on to find out what impact improved NOI has on your building.
One important area an improved NOI impacts is your building revenue.
Since one component of NOI is revenue, improving your NOI increases the revenue you generate. If you have a low NOI, it means you’re missing out on revenue opportunities. Whether that’s due to high vacancies, not tracking billables to collect the most revenue, or not maximizing your RSF, you’re losing building revenue.
Missing out on some revenue, such as having only a few units empty, might not seem like a big deal. But, those missed revenue opportunities can add up to cost your building hundreds of thousands a year.
Improving your NOI can help you take advantage of every revenue opportunity in your property. One way to increase revenue and improve your NOI is to minimize vacancies. Your leasing team has to keep track of all your tenants, when their lease agreements end, and prospective tenants. Without visibility into the leasing process, your team can’t minimize vacancies – leading to lower revenue.
While you could hire more leasing staff to better keep track of all the moving parts in the leasing cycle, this will increase your operating expenses. And, lower your NOI. An easier way is to use building operations software that provides visibility into the leasing process, with tools like leasing visualization, marketing floor plans, and more. This can help your team get ahead of vacancies – improving your NOI and increasing revenue.
Another way to improve your NOI and increase revenue is by capturing billables. When your team performs work, it’s easy for them to forget to log labor or material costs. And, when tenants use resources, you might not bill them for usage consistently. Not capturing these billables reduces the revenue you can generate from your property.
However, capturing these billables can be a challenge with paper methods to record work or to bill tenants for space usage. An easier way is to use building operations software that makes it easy to create and log billables across your property. That way, you can increase your NOI and capture all available revenue.
You can also improve your NOI by maximizing your RSF – and increase your rental revenue. To have the most RSF possible, you need to measure your building with the latest measurement standard – like BOMA 2017 or REBNY. If you’re using an older measurement standard, you’re missing out on RSF for things like vertical penetrations or outdoor areas. So, you’re not renting your space for the most possible.
While you could hire an architect to remeasure your space, this can be time-consuming and costly. Instead, you can use a building operations platform with space management functions. That way, you can easily remeasure your building with the latest standards – increasing your rental revenue and NOI.
One important impact of improving your NOI has on your building is increased revenue.
Improved Tenant Satisfaction
Another impact of improving NOI for your building is increased tenant satisfaction.
Happy tenants are the key to a profitable property. If you have a high NOI, then you have both a high earning property and satisfied tenants. However, with a low NOI, your tenants are dissatisfied with your building. Communication problems and an inability to provide feedback (to name a few) are issues that could hurt tenant satisfaction.
When your tenants are unhappy with your property, they’re likely to leave as soon as their lease is done. That means you’ll miss out on rental revenue – leading to a lower NOI. By improving your NOI, you can increase tenant satisfaction and retention.
One way to improve your NOI and tenant satisfaction is by communicating with tenants how they prefer. If you communicate with tenants mostly through email and calls, you’re not communicating the way tenants want. 80% of tenants prefer to communicate by text. Not communicating how tenants prefer also means you’re not getting important info to a majority of your tenants – because they rarely check email or voicemail.
So, you need to communicate with tenants across multiple channels – like slack, text, or messaging apps. But, communicating in a variety of ways can take up a lot of your team’s time. An easier way is to use a building operations platform that lets you create a message once and distribute it across multiple channels.
That way, you can reach tenants how they want, without spending all day on it. Communicating with tenants on their term leads to happier tenants who want to stay in your building – and improved NOI.
Another way to improve NOI and tenant satisfaction is by providing the opportunity for tenants to submit feedback. While you might think you and your team are doing a great job for your tenants, you don’t know unless you collect feedback. Without feedback, you could be creating a negative tenant experience that prompts them to leave – without knowing it. This can hurt your NOI because of less rental revenue.
So, improving NOI means you know exactly what you’re doing well for tenants and what you should do better. While you could do this through paper or email surveys, collecting and analyzing the responses can take hours each week.
Using building operations software can make this easy with tenant feedback options for tasks like work orders. Once your team completes a work order, tenants are automatically prompted for feedback – without any work for you. That way, you always know what tenants think of your service, making it easier to delight them. And, improve your NOI and increase tenant satisfaction.
Improving your NOI can also impact your building by increasing tenant satisfaction.
Reducing Operating Expenses
Along with increasing revenue and tenant satisfaction, improving your NOI can impact your building with reduced expenses.
Improving your NOI means you’ve reduced expenses to maximize the impact of your revenue. But, if you have a low NOI, you have high expenses due to improper asset maintenance or choosing the wrong vendor (to name a few). Regardless of the cause, high operating expenses reduce building profitability.
Having high expenses could be costing your building hundreds of thousands (or more) each year. Severely high expenses could even outweigh any revenue you generate. By improving your NOI, you can reduce your operating expenses. And, have a more profitable building.
Regular Inspections and Maintenance
One of the key causes of high operating expenses is equipment breaking down due to a lack of preventative maintenance. If you don’t regularly inspect your equipment, you have no idea if it’s in good or bad shape. And, you miss small problems when they could be fixed. Instead, you only notice issues when your equipment fails – leading to much higher expenses and a lower NOI.
To keep asset expenses low, you need to regularly inspect your equipment and perform preventive maintenance. But, it can be hard to know if your team is consistently conducting maintenance and inspections throughout your building. While you could make them turn in a paper summary of inspections, it’s easy to lose. And, it’s another thing on your team’s to-do list.
Instead, you can use building operations software with inspection and preventive maintenance templates your team can fill out from a mobile device. That way, you always know the state of building assets and can keep them in top shape. So, you avoid costly equipment failures for higher NOI and lower expenses.
Easier Vendor Selection
Another area that could lead to high operating expenses is your vendors. Whether your vendors are expensive to hire, do shoddy work, or create a negative tenant experience, they can significantly increase your operating expenses. Improving your NOI means you have lower vendor costs, leading to reduced operating expenses.
So, you need to hire vendors who do great work – without overcharging you. While you could rely on current vendors and recommendations from your network, it’s hard to compare these vendors to ensure you’re getting what you need.
An easier way is to use building operations software that has competitive bid functionality. With the software, you can easily find vendors with great reviews from a trusted database. And, the comparison is a breeze with automatically generated side by side vendor tables. That way, you can find the best vendor for your property in less time. And, you can improve your NOI and lower your operating expenses.
The last impact of improved NOI on your building is reduced operating expenses.
Wrapping It Up
Improving your NOI can help you generate more revenue from your building. At the same time, it can help you reduce your expenses. And, improving your NOI can also positively impact the tenant experience.
You can improve your NOI and increase your revenue by minimizing vacancies, capturing more billables, and maximizing RSF. For a better NOI and tenant experience, you can use multi-channel communication and make it easy for tenants to provide feedback. And, to improve NOI while reducing expenses, you should conduct regular inspections and choose the right vendors.
While improving your NOI can have many positive impacts, it can be time-consuming and expensive to improve NOI through traditional methods. An easier way is to use building operations software that makes it simple to increase revenue, improve the tenant experience, and reduce expenses – all of which lead to a more profitable building.
Looking for a building operations platform that can help you improve your NOI? Consider using Prism. As a modern building operations platform, Prism can help you minimize vacancies, maximize RSF, use multi-channel communication, conduct regular inspections and maintenance, and more.
Read our quick five-minute guide to learn how you can optimize your CRE technology stack to deliver on reducing operating expenses, increasing revenue and delivering a first-class tenant experience, while reaching maximum NOI.