Post-conversion valuation: turning your office asset into rental performance

02

The framework

For the asset manager, conversion is no longer a capex/opex trade-off: it is a question of asset value at the next due diligence. The Eco Energie Tertiaire scheme requires a reduction in final energy consumption of at least 50% by 2040 compared to 2010. A majority share of the French office stock requires deep renovation before 2034.

Three axes structure your cash flow and your exit value:

• Headline rent: an asset certified Very Good or holding an equivalent Silver health-and-wellbeing standard re-leases at a noticeably higher rate per sqm than an unlabelled property in the same area, a gap documented by several sector benchmarks (ARSEG, OID).
• Vacancy avoided: our deliveries allow a markedly faster return to lease than the market average, directly reducing the loss of rental income. For an asset of 850 sqm, each month avoided represents 25,000 to 45,000 EUR of revenue.
• Exit value: the triptych of in-use environmental certification, usage certifications and health-and-wellbeing standards now features in the ESG grids of institutional funds.

In practice, the most common pitfall we see in investment committees: confusing average vacancy with conversion opportunity. On delivered operations, it is never the vacancy rate that justifies the trade-off, it is the rent gap between certified and non-certified assets on the same street. Without this gap documented beforehand with local brokers, the uplift becomes insufficient and the operation destroys IRR.

03

Your gains

Reading the business plan of a valued conversion

For your investment committee, the difference reads line by line: a well-positioned conversion generates a significant rent uplift compared to the pre-conversion market, an accelerated return to occupancy and an IRR higher than that of a simple renovation. Our teams build with you the business plan reading adapted to your asset and its location, drawing on local broker data and disposal references available on the market.

The exit value is supported by the environmental and usage-quality certifications integrated at the design stage, which reduce the ESG risk premium applied by institutional buyers in due diligence. For a typical asset of 850 sqm, the cumulative value difference at disposal justifies the trade-off in the majority of configurations we model. Tenant satisfaction post-delivery: 4.3 out of 5 on average across our recent portfolio.

04

Commercial honesty

When full valuation is not the right trade-off

We decline one assignment per quarter, and we own that. Full valuation with triple environmental certification is not justified in two specific configurations, where it destroys value instead of creating it.

Asset held over a short horizon (less than 3 years). Label processing takes 4 to 8 months, and the additional cost represents 3 to 6% of the works cost. Over a short holding period, these costs are not recouped before disposal: you pay for the certification, the buyer captures the value. Kytom recommendation: targeted renovation on the ESG items most visible in due diligence (energy performance certificate, LED lighting, measured air quality), without full labelling.

Asset of less than 400 sqm in a secondary office area. On assets of this size in a secondary area, the value uplift generally remains insufficient to cover the capex of a heavy conversion: the Kytom recommendation is a targeted refresh of the common volumes and direct re-marketing with a local broker. The ROI is immediate, the risk-taking marginal.

In both cases, we provide you with a costed trade-off note rather than a commercial proposal. Our long-term interest: 1200+ projects supported since 2006, the majority on a recurring assignment basis.

05

Method

1. Asset audit and rental comparables
   Technical and usage diagnosis of the asset, cross-referenced with the market rent grids observed in the area. Three costed scenarios are produced (base, median, ambitious) with expected uplift, capex, IRR and exit value modelled. Deliverable: trade-off note of 15 to 25 pages, delivered within 3 weeks.
2. Target programming and compliance
   Calibration of the programme to the rental standards of the area and the regulatory requirements applicable to workplaces, to standard NF X35-103 of June 2013 on workplace lighting and visual ergonomics, to the RGAA for digital spaces and to the tertiary decree for the energy trajectory. The environmental certification target is set at this stage with your property manager.
3. Design, layout and space planning
   Layout plan with a ratio of 7 to 12 sqm per workstation, 25 to 35% of the surface in collaborative third spaces, furniture calibrated to the target rent grid with 3 to 7 variants proposed. 3D visualisation and complete schedule delivered for committee validation.
4. Works management by a local team
   Implementation by one of our 11 agencies in France and Spain, with lead time and budget set in the contract. Weekly costed reporting, hotline 8am-6pm, intervention within 4h on a site incident. Independent quality unit ensuring the monitoring of compliance with the budget envelope and deadlines on each operation.
5. Valuation file and delivery to the property manager
   Delivery of a complete file to your property manager: commercial sheet, documented ESG argument for due diligence, target rent grid justified by comparables. Support through to the effective return to lease of the delivered surfaces.