Value-Add Industrial Rehab Numbers

[Andrew Tripp]

We are looking at a value-add acquisition of a 33K sf warehouse asset that is currently owned by a user who is consolidating operations at another location and vacating at closing.  We would be dividing down to 4 smaller units, all separately metered and demising walls in place, and then renting them out individually.  The play in our market is to rehab what is considered a vacant building to obtain a pretty lucrative real estate tax incentive that makes the fully stabilized building much more attractive to an investor.  So we are developing a pro forma model for a redevelopment type scenario where are bunch of capex goes in up front to get the units back to market.  We have not supervised this level of rehab before.  A few items that I was wondering whether anyone has had any direct experience with on the construction side (understanding some of these things are very market-specific):

- Asphalt parking lot replacement - looking at about $5.00/sf for this

- Concrete aprons around the docks - there are 4 front dock doors, and some of the aprons needs some patching/replacement.  I don't think they all need to be replaced, but what would be a good psf number for replacement so we can ballpark it?  We've got about 20K all in set aside right now. 12.5 foot clear ceilings btw.   

- Fire sprinklers - looking at about $5.00/sf for this.  Quotes seem be anywhere in the $2.00 to $7.00/sf range.

Also, somewhat related, what do people think is the best source for what would be a construction/mini perm type of loan product, where there would be an interest only (6-18 months or so) component then a 3-4 year maturity after conversion/stabilization.  We have some relationships with the local/regional banks that do these types of loans.  A couple credit union prospects as well. But wondering if there are other non-traditional debt providers out there that concentrate in this space that I'm not thinking of.

Any thoughts would be appreciated.  Thanks in advance!