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Kevin Ahern

By: Kevin Ahern on September 25th, 2017

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What's the ROI of a Commercial Renovation?


There are many reasons that business owners choose to renovate their commercial spaces. Old, dated facilities can reduce customer confidence. In addition, some businesses that do not maintain modern facilities will encounter problems relating to maintenance and cleanliness. Over time, maintenance problems and inefficiency can cost businesses hundreds or even thousands of dollars.

Many business leaders understand that investing in their business can help grow their company. In addition to improving the appearance and functionality of the business, many commercial spaces enjoy solid ROI after a commercial upgrade, making it easier to sell the business or rent out the space in the future. At Litchfield Builders, we help business owners to improve the functionality and appearance of their commercial buildings.

Calculating Commercial Renovation ROI

Calculating commercial renovation ROI can help business owners determine whether a commercial renovation is a worthwhile expense. In general, there are three steps to determining the ROI of a commercial renovation project.

Set A Goal

Setting a goal for the renovation can help business owners determine when their project is a success. Examples of common goals that business owners have when they start their project include:

  • Make recruiting easier. Commercial renovations can help attract better employees and can improve employee retention.
  • Attract customers. A newly renovated space can help bring more customers in the door. Customers like to shop and do business in establishments that are attractive.
  • Improve efficiency. Old commercial spaces can be energy inefficient, space inefficient and bad for productivity. Improving efficiency helps improve productivity.

Quantify the Cost

Determining the cost of a commercial improvement project can be a lengthy process. Business owners start by getting bids from several contractors. Once several contractors have placed bids, the best contractor for the job must be selected.

It’s important to remember that the lowest bid is not always the best bid, because contractors who cut costs may install poor quality products and use less skilled labor. To find the best contractor for the project, business owners are encouraged to look at each contractor’s portfolio, contact references, check licensure and read online testimonials.

Perform Market Research

Once the cost has been set and the goal has been determined, the final step to calculating ROI is to perform market research to determine the best operating payback and increased market value of the project. During this process, business owners must answer questions such as:

  • How much will this project increase business efficiency?
  • How many new customers will be the result of this project?
  • How much will business grow over time because of this project?

Knowing the answers to these questions can help business owners determine if the project is worth the expected cost.

How To Maximize ROI

Once it’s been decided to move forward with a commercial project, maximizing ROI is important. There are many things that can be done to increase the value of the commercial renovation.

Add Safety Features

Older buildings often lack modern safety features. Installing safety features retroactively can decrease the risk of accidents, keep employees productive and lead to fewer worker’s comp claims. Over time, safety features help save businesses money and can even improve the business’s reputation in the community. Adding safety features is a good step for businesses hoping to build a culture of safety among workers, and is especially important for businesses in fields like manufacturing, mechanics and construction.

Address Cosmetic Issues

Old fixtures, carpeting and paint can make a bad impression on customers. Updating these features can help a business appear successful, and can help bring more customers through the door. Sometimes cosmetic remodels coincide with business re-branding. Often these projects are completed with the help of a marketing professional who can help ensure that the remodel aligns with the new brand.

Increase Employee Productivity

A commercial remodel can help increase employee productivity by improving space efficiency, simplifying processes and increasing business capacity. Installing faster equipment and redesigning the space enables employees to do their jobs more effectively while increasing their ability to complete everyday tasks.

There are many ways that a commercial remodel can increase employee productivity. Some common renovations that can help workers do their job more effectively include:

  • Installation of better lighting. Good lighting conditions enable employees to work quickly and without error.
  • Widening of hallways and walkways. Widening of hallways and walkways can decrease the number of accidents while increasing an employee’s ability to walk quickly from one place to another.
  • Increase in electrical capacity. Sometimes all it takes to make a business work faster is to increase the electrical service in the building and the number of electrical outlets that workers or employees have access to.
  • Improvements in HVAC systems. Keeping employees physically comfortable can help them to concentrate and stay productive throughout the day.

Go Green

Implementing energy efficient, environmentally friendly systems in your remodel can lead to significant savings in electricity, gas and water usage. Not only is this good for the environment, it also helps attract customers who support eco-friendly businesses. Some common green building features that businesses install to increase their energy efficiency include:

  • HVAC improvements. Installing energy efficient air conditioning and heating can help keep the facilities comfortable throughout the year. During this kind of project, many businesses seal and insulate or replace their ducts to prevent air leaks
  • Low flow plumbing installation. Installing low flow plumbing fixtures can help save water. Updating the piping at the same time reduces the risk of leaks.
  • Window upgrades. Replacing old windows with new, energy efficient models can prevent energy loss. Low-e coatings can prevent heat transfer through the glass, reducing the burden on the HVAC system during the heating and cooling season.
  • Cool roof installation. Installing a “cool roof” can help keep the building cool at the hottest times of the year. Cool roofs reflect sunlight back into the atmosphere, thus reducing a building's interior temperature during the summer months.

Get Started With Your Commercial Renovation Today

Commercial renovations help businesses save money and can attract more customers. Businesses that go through a rebranding process often benefit from commercial renovations because remodeling can help realign the look of the business with its new brand. Knowing when to remodel can help business owners grow their business.

Are you a business owner who is considering a commercial renovation? Leave your questions and comments in the box below! At Litchfield Builders, we help businesses remodel their commercial space and make their buildings more energy and space efficient. To find out how much it would cost to have your commercial space redesigned, contact us today. You can also find out more by taking a look at our free Commercial Sustainability Guide.

About Kevin Ahern

Kevin is the Co-Founder of Litchfield Builders, an award-winning, industry leader with a reputation for managing projects others shy away from. They are known for their high-quality work, customer service, and reliability and though still relatively small in size, Litchfield Builders now competes with some of the areas largest firms in both the residential and commercial arenas.