Question: My condo building is doing a comprehensive common space redesign [of interior décor and landscaping]. Is there any precedent for an increase in value in units after the project is completed?
If the project is well-planned (the design makes sense) and budgeted for (doesn’t require a special assessment or fee increase) yes, but it’ll probably take 2-3 or more years.
The price of a condo is heavily influenced by the sale of similar units (comps) within the same building over the past six to twelve months. The first buyers to come along after the renovations are complete will be able to leverage sale prices from the comps to negotiate for a minimal, if any, increase in sale price.
However, a well-planned redesign should mean better curb appeal and more interested buyers, which will lead to faster sales (fewer days on market). As the speed of sales pick up in a building, buyers become more likely to pay full ask and during busy months, bidding wars may take place. At this stage, you’ll see property values increase at a faster pace than surrounding buildings in your local market (all else held constant).
In summary, the ideal redesign lifecycle is:
- Increased buyer activity/interest
- Faster sale cycle and more buyer competition
- Increased property value.
For readers living in a building that’s considering a redesign, strategy and planning is key. Here are some things to consider:
- What types of buyer will your building attract over the next 5-10 years (Hint: over 27 percent are ages 25-34, according to WAPO) and what do they like?
- Will the expenditure result in an increase in fees? Increased fees put downward pressure on sale price.
- Maintenance cost and durability of new décor (don’t put wood floors in your foyer).
- Encourage your board to take a field trip to newer buildings for ideas.
- Bring in an expert! You’re going to spend a lot. Get a few proposals from interior designers and let somebody help you choose the colors, lighting, and furniture.