Take a walk through some of Ottawa’s most popular urban neighbourhoods, and you’ll often see residential apartments sharing the same building as ground-level offices, restaurants, and shops.
For landlords, managing a mixed-use building means catering to the unique demands of commercial and residential tenants. It can be a tricky balancing act that can lead to conflicts over parking, noise and even odours drifting up from a commercial kitchen.
Experienced property managers know how to prevent such disputes and minimize conflict between tenants. Conrad Pool, the president of Sleepwell Property Management, says it starts with open and transparent communication with prospective tenants before they move in about issues as simple as store or restaurant hours.
Sleepwell is one of Ottawa’s largest third-party property management firms. Over its 15-year history, it has developed an expertise in helping property owners generate the maximum return from their commercial and residential units.
Mixed-use buildings present a unique opportunity for investors to diversify into multiple asset classes, reducing risk. When working with the right property manager, real estate investors can find creative ways for the residential and commercial units to complement one another – ultimately leading to greater long-term returns.
Attracting tenants
Real estate experts advocate that owners of mixed-use properties look for opportunities to create a cohesive sense of community. The right restaurant or service provider, such as a drycleaner, can benefit from potential customers who are literally just a few steps away. Similarly, amenities such as a coffee shop, bakery or yoga studio are a lifestyle bonus for many prospective residential tenants.
Although the maintenance rules may differ for commercial and residential units, Pool says keeping a storefront in good repair makes the adjoining apartments more appealing to prospective tenants.
Sleepwell advises its investor clients on cost-effective upgrades that enable a unit to command higher rental rate. The firm can paint a full picture of the property, including future costs for major repairs such as the roof and HVAC system, the current market for similar units and the potential to create additional value in the coming years.
Here are some of the pieces of advice that Sleepwell commonly offers clients:
- Bring the building up to code – electrical, plumbing and fire systems all need to pass current safety standards;
- Remove any old signage, logos or other distinctive features so the new tenant can get their business façade and signage designed and in place as soon as possible;
- Clean the building – inside and out, including the parking areas;
- Add a new coat of white paint. White allows tenants to imagine what they can do with the space; and
- If the floors are damaged, install a subfloor in preparation for a commercial tenant to install a finished floor to their liking.
“Investing in your properties attracts great tenants, higher rents, and improves the neighbourhood”, Pool says, predicting that the popularity of mixed-use buildings will continue to rise as more Ottawa residents choose to live and work in centrally located urban neighbourhoods.
