Price Per Foot for a Rehabbed Law Office in Summerville

[Jason Merchey]

Hi all. I have a 6350' office built in 1974 under contract. It's at the busiest intersection in the city of Summerville. Definitely a fixer upper, like $25/foot for interior, exterior, landscaping, asphalt improvement. But whereas it has fallen into disrepair and has some water and termite damage and needs hundreds of gallons of paint and hundreds of yards of carpet, it has potential. Going to take it up to about Class A-, were it not for the lack of elevator, which would take it down to B+. No granite, but otherwise nice and new. All new bathrooms. Like nothing has been done in 20 years to this poor place.

I'm buying it for $100/foot. My Realtor tells me it would go for the median price for office space in this area, at this time, of $170/foot.  However, I was definitely thinking of leasing it up and selling it based on $26/foot/year and a 6.5%-7.5% cap rate to an investor. That would cost me 6% in leasing fees, though, and 6% in sale costs. Thus, my alternative would be to simply lease it and hold it for 15 years. I think if I stayed on top of the roof and maintained paint and eventually put in new asphalt, it would age well. It's stucco and there is little or no cracking evident.

Anyone able to confirm that that those prices per foot seem reasonable for downtown Summerville law offices, accountant offices, etc?  I mentioned there are no elevators. I was thinking of making the 1st floor conference room available on an appointment basis to the (probable) 7 separate tenants on the top floor, that way they could meet with an elderly client on the 1st floor. Or handicapped. Goal would be maybe $6,000 in rent to a law firm on the first floor, and $1,000 each to 7 professionals on the top. Or thereabouts. MIght try to engineer a common receptionist upstairs, if that is done these days.

I have been focusing on repair issues and just early due diligence issues in the last week. I have been taking it on faith that $171/foot or $26/foot are quite possible. 

Charleston, Goose Creek, Ladson, North Charleston