Overview · What & why
A decision, before a calculation.
Value-add investing seeks to improve an existing asset through physical work, leasing or operations. A credible thesis identifies a specific constraint and a feasible intervention. Buying a low-rent building does not by itself prove that rents can increase. The current condition may reflect location, functional limits or user demand that renovation cannot change.
A concrete example
Foundry Works is an 80,000-SF building with an assumed $1.6M renovation. The case targets $12 net rent at 90% occupancy after a year without rent. These targets are hypotheses to test against achievable leases and the building’s remaining limitations.
What to remember
Explain the mechanism of improvement before projecting the return.
Before using this in a project: Condition survey, user interviews, as-is leases, competing renovated space and a scoped intervention plan.