Looking for insight on building new"Small Industrial Units" 2500 square feet or less.

[John Hanewich]

Hi all,

I am running through proposed ideas for my first real estate deal. I currently live in Southern Maine and am looking to construct some kind of new project rather getting into rehabbing existing residential

Proposed Land Budget 100-200k

Construction Budget: 400k

All in 500-600k.

I have found that if I do the site work myself including clearing, septic and digging the foundation is that i can sub contract out either steel or a Lester style building (50x150) for around 300k installed with insulation and power , divided into three 2500 square foot units.  These would be bare rental units where tenant builds to suit or we could with appropriate rent charge.

I have received recent quotes for LESTER building around 125k for a 40x80 so I'm doubling that , concrete not included.

I feel like i can't loose with this strategy even charging $2 a square triple net for these units ? Is anyone else developing in this space?

My numbers might be off a little bit but please consider I am doing the site work. Looking for feedback on this. I feel like I might even come out ahead on the appraisal after the build is complete and walk away with my initial investment ?

[John McKee]

two things I have learned.  1,200 is a sweet spot for demand, and if you do have a large unit of 2,500 get a couple of them zoned for auto.  Big demand for auto repair or auto accessories.

[Michael K Gallagher]

@John Hanewich. I love the concept especially given the need in your market for storing things like snow machines, boats, rvs etc, but also for repair or general "fab shops".

As long as you are seeing the demand in your specific market for these spaces, and perhaps its worth getting some leases signed up prior to breaking ground but thats a personal preference thing, I think the numbers look promising if the use case is there.

[Kristi Kandel]

Quote from @John Hanewich:

Hi all,

I am running through proposed ideas for my first real estate deal. I currently live in Southern Maine and am looking to construct some kind of new project rather getting into rehabbing existing residential

Proposed Land Budget 100-200k

Construction Budget: 400k

All in 500-600k.

I have found that if I do the site work myself including clearing, septic and digging the foundation is that i can sub contract out either steel or a Lester style building (50x150) for around 300k installed with insulation and power , divided into three 2500 square foot units.  These would be bare rental units where tenant builds to suit or we could with appropriate rent charge.

I have received recent quotes for LESTER building around 125k for a 40x80 so I'm doubling that , concrete not included.

I feel like i can't loose with this strategy even charging $2 a square triple net for these units ? Is anyone else developing in this space?

My numbers might be off a little bit but please consider I am doing the site work. Looking for feedback on this. I feel like I might even come out ahead on the appraisal after the build is complete and walk away with my initial investment ?

 @John Hanewich building new is always a good option especially if you have the necessary licenses and can do some of the work keeping costs down. I built family dollars for years using metal buildings and when you have the right erection crews those things fly up. 

What type of MEP work are you putting into the design for getting the sewer, water, power, and internet (assuming you're not extending gas) to the inside of the building? 

Are you doing the interior TI build out or are you just building the shells and the future tenants will be responsible for building out their units as needed? 

What about drive approaches, parking lots, site lights, landscape, irrigation, etc.? 

Happy to chat more. Just shoot me a DM. 

[Bart Tilly]

Quote from @John McKee:

two things I have learned.  1,200 is a sweet spot for demand, and if you do have a large unit of 2,500 get a couple of them zoned for auto.  Big demand for auto repair or auto accessories.

 @John McKee is spot on with his feedback.  I have industrial suites that range in size from 700, 1,200, 1,800, 2,500, 4,000, 8,000, 12,000, 20,000 and 25,000 sq ft.  My experience says that the smaller the industrial space the greater the demand.  I've been at 100% occupancy for my small spaces for the past 5 years.

My only feedback is that $2 per month per sq ft NNN seems really high to me, but each market is different. My 700 sq ft spaces are $1.50 per month. Larger are as low as $1.15. Keep in mind that I'm in a rural market.