In commercial real estate, a property’s value is largely influenced by its net operating income. A commercial real estate owner, therefore, is able to increase his/her property’s value by simply increasing the net income.
Depending on the capitalization rate of commercial properties in that area, increasing a property’s net operating income will increase the property’s value in a substantial manner, but it will also achieve an increase the owner’s cash flow, which is what the ideal would be.
“How to do it?”
There are several ways to increase the net operating income of a property in order to increase the value of the property. In order to accomplish this, you would either have to increase the revenue that is generated from the property, pay down the mortgage, or “value add”.
