October 2023 | Volume 6
KNOWLEDGE HUB: INSIGHTS AND INFORMATION
LED Lighting
Installing LED lighting in commercial properties offers numerous benefits that can make it a wise choice for property owners. As Lonicera acquires properties, one of the improvements we look at in the first year are replacing the current lights with LED. While we may not always choose to do the whole project immediately, we also consider replacing burnt out bulbs with LED.
LED lighting is highly energy-efficient and consumes significantly less electricity than traditional incandescent or fluorescent lighting. This can lead to substantial cost savings on utility bills, making it an attractive option for both landlords and tenants. In one of our properties, we have analyzed the cost savings since putting in LED lights. Although occupancy rose by 20%, we have seen electricity usage drop by 17%. While we cannot know for sure that all of the drop is tied to the LED light install, we do know that it contributed to the savings. In addition to electric savings, LED bulb replacement can qualify for tax credits and credits from the electric company. All of these cost savings are analyzed to determine the return on investment.
LED lighting also creates savings in reduced maintenance costs. LED bulbs have a longer lifespan compared to conventional lighting options. They can last 25,000 to 50,000 hours or more, reducing the frequency and cost of replacements. With these longer lifespans, LED lights require less frequent maintenance and replacement, resulting in lower maintenance costs over time. This is especially beneficial for property owners who want to minimize ongoing expenses.
In addition to savings, LED lighting can increase value of the property as well. This improvement is considered a valuable feature by tenants and future buyers. When marketing the property, LED lighting provides energy efficient and well-lit spaces that attract and retain tenants, as it contributes to their overall comfort, lower operational costs, and it aligns with modern sustainability and quality standards.
In summary, installing LED lighting in commercial rentals can lead to cost savings, better lighting quality, improved sustainability, and increased property value. It can also make rental spaces more attractive to prospective tenants.
COMMERCIAL LEASING OUTLOOK
Rising interest rates impact the commercial real estate market and can lead to a drop in commercial leases signed. Businesses who would typically be expanding and looking for newer, updated spaces are forced to stay in their current spaces due to financial strain. Businesses may also become more cautious about committing to long-term leases when economic uncertainty is on the horizon. Lonicera continues to keep these factors in mind as negotiations occur for leases and renewals.
WHAT THE TEAM IS READING
Article by Alyssa Mercer
"Never Split the Difference" by Chris Voss is a compelling book that delves into the art of negotiation through the eyes of a former FBI hostage negotiator. Voss, drawing from his extensive experience, offers a unique perspective on negotiation techniques that can be applied not only in high-stakes hostage situations but also in everyday business and personal interactions. The core of Voss's approach revolves around the concept of tactical empathy, which involves actively listening to your counterpart, understanding their emotions and needs, and using this understanding to achieve mutually beneficial outcomes. He emphasizes the power of open-ended questions, mirroring, and labeling emotions to create rapport and gain valuable information during negotiations. Voss also challenges the conventional wisdom that splitting the difference is the best approach, advocating for more creative solutions that can lead to better results.
Throughout the book, Voss shares real-life anecdotes from his time as a negotiator, offering practical insights and illustrating how his strategies have been successfully employed. Whether you're negotiating in a professional setting, haggling over personal matters, or trying to navigate complex, high-stakes negotiations, "Never Split the Difference" provides valuable and actionable advice on how to become a more effective and strategic negotiator.
FUTURE OUTLOOK
Since Lonicera Fund IV closed mid April, the team has been actively looking towards Fund V. Although we are currently in Columbus and Indianapolis, we continue to analyze deals throughout the Midwest to ensure we are pursuing the best opportunities for our investors.
If you have any questions about Lonicera Investments, our past performance, or our future, please reach out. We would be happy to sit down with you and answer any questions you have!
ANY ESTIMATES OR PROJECTIONS AS TO EVENTS THAT MAY OCCUR IN THE FUTURE, INCLUDING PROJECTIONS OF REVENUE, EXPENSE AND NET INCOME CONTAINED IN THIS VALUATION SUMMARY OR ANY OTHER OFFERING DOCUMENTS, ARE BASED UPON THE BEST JUDGMENT OF THE COMPANY’S MANAGEMENT AS OF THE DATE OF THIS VALUATION SUMMARY OR THE APPLICABLE OTHER OFFERING DOCUMENT. WHETHER OR NOT SUCH ESTIMATES OR PROJECTIONS MAY BE ACHIEVED WILL DEPEND UPON THE COMPANY ACHIEVING ITS OVERALL BUSINESS OBJECTIVES AND THE AVAILABILITY OF FUNDS. THE ESTIMATES AND PROJECTIONS NECESSARILY MAKE NUMEROUS ASSUMPTIONS WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS, TAXES AND OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. THERE IS NO GUARANTEE THAT ANY OF THESE PROJECTIONS WILL BE ATTAINED. ACTUAL RESULTS MAY VARY FROM THE PROJECTIONS, AND SUCH VARIATIONS MAY BE MATERIAL. THE COMPANY HAS NO OBLIGATION TO UPDATE OR OTHERWISE REVISE THE ESTIMATES OR PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING OR DEVELOPMENTS OCCURRING AFTER THE PREPARATION OF THE ESTIMATES OR PROJECTIONS OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.