08/26/2026 - Protecting NOI & Creating Value in Commercial Real Estate

This CG Commercial Call features Tim Bratz breaking down how commercial and multifamily investors can protect NOI and create value in a difficult operating environment. With rents remaining relatively flat while insurance, taxes, labor, utilities, and other expenses have risen, the discussion focuses on controlling expenses, creating additional revenue streams, improving property management, and identifying distressed acquisition opportunities.

What This Call Covers

• Why Commercial Property Values Are Under Pressure
  • Flat rents combined with rising operating expenses are compressing NOI
  • Higher interest rates and cap rates are putting additional pressure on valuations
  • Properties can lose significant value even when occupancy remains relatively stable
• Reducing Property Insurance Costs
  • Tim's portfolio reduced annual insurance costs from approximately $2.7M to $1.6M
  • Group purchasing and increased scale can create stronger negotiating power with carriers
  • Investors should regularly rebid and restructure insurance rather than accepting annual increases
• Finding New Revenue Inside Existing Properties
  • Look beyond rent increases for additional income opportunities
  • Strategies discussed include tenant liability insurance, valet trash, childcare/tutoring partnerships, and other resident services
  • Small recurring revenue streams can materially improve NOI when applied across a large portfolio
• Reducing Utilities & Operating Expenses
  • Evaluate water-saving technology and other utility optimization strategies
  • Tim shared examples of properties achieving roughly 24% average water savings
  • Appeal property taxes and negotiate vendor, supply, and utility costs wherever possible
• Improving Property & Asset Management
  • Poor property management can destroy more value than broader market conditions
  • Consider bringing property management in-house for better visibility and control
  • Review P&Ls monthly and use weekly KPIs to track occupancy, leasing, unit turns, vacancies, and property performance
  • Physically inspect properties rather than relying entirely on management reports
• Finding Distressed Acquisition Opportunities
  • Current market pressure is creating opportunities to acquire properties from overleveraged or distressed owners
  • Look for deals where existing debt can potentially remain in place while the new operator takes control
  • The biggest opportunities may be properties with unusually high expense ratios that a stronger operator can reduce
• Opportunity in Affordable Housing
  • Tim sees long-term opportunity in workforce and affordable multifamily housing
  • New construction costs make it difficult to add affordable inventory
  • Existing apartments purchased substantially below replacement cost may benefit as demand for affordable housing continues
• Stay Focused Instead of Chasing New Asset Classes
  • Difficult markets can tempt operators to abandon their core strategy
  • Understand your existing skill set and look for adjacent opportunities before chasing the next investment trend
  • Operational expertise can become a competitive advantage when less-disciplined owners are struggling
• Key Takeaway
  • In today's commercial real estate market, investors can't depend on rent growth or falling interest rates to solve performance problems. The priority is to control the controllables—reduce expenses, increase ancillary income, improve property management, protect NOI, and position yourself to acquire distressed assets from operators who haven't done the same.