All Forum Posts by: Roy Bhavi

Is anyone leasing up / building micro commercial / industrial flex (250-700 sqft) spaces? I've met with a few brokers and most are hesitant to lease up small space and curious if others have been successful and what product they are using to source / find demand for mirco units. I believe in the space, return, etc. but curious how others are leasing up. Appreciate the help!

We have a portfolio of multi tenant flex industrial properties that have done very well for us, and consistently adding more assets. I am always looking to learn from others and add value wherever I can. I look forward to collaborating! 

Quote from @Roy Bhavi:

Quote from @Max Brudner:

The land is 150’ front to back and 85’ side to side. I have a 10’ side easement and about 10’ front and back. There’s a alley road in the back. Please see the picture. Thanks! 

 The only kind of Flex Space I would build on this small lot would be single-tenant (may be 2 tenants max). That way you build 5000 SF of leasable space and lease to 1-2 tenants. That would also solve your parking dilemma as you would be able to allocate 3-4 spaces for each tenant (that is the norm in Flex Space). But this plan takes away the attractiveness of Flex Space i.e. "wide and shallow pool of potential tenants".

Therefore in your situation, I would first get designs approved by city/county, then prospect for 5-6 potential tenants, have 1-2 of them sign a pre-lease to deliver space in 6-9 months, and only then begin construction.

Hope that helps.

Hey Roy, thank you so much for the great feedback here! I'm looking to build a multi-tenant Flex building for my business and lease out the other side. Can you share details on generic unit economics to use for something like this? Let's assume I can lease out a bay at $8/sqft/year. How much money should I allocate for the design and construction? That way I can determine what a good price per sqft for the land should be. 

Wanna buy 43k sq ft, multi tenant in Dallas? Right off 75, fully leased. 

I'm looking to build smaller warehouses. Flex space and 4-5k sqft warehouses in an industrial area in the Midwest. 

I did research on price per sq ft and found that it would be $20-30 per sqft. I never trust basic estimates, so I figured it was fair to assume 2x+ maybe $80/sqft. 

Now I'm getting bids in at $140-170/sqft. not including the lot, ground work, etc. Seems very high for mostly unfinished steel frame building. Concrete floors, open rafter roof, and drywall walls (no paint).

I know home builders in the area are building 2500-3000 sqft houses for $200/sqft and I know a guy that builds duplexes for exactly $160/sqft. 

Am I getting screwed? 

Anyone currently building the same, would like to know your building costs.

You're not getting screwed. This is why nobody builds these small buildings. Costs are too high, tenants too weak to sign NNN leases ahead of development.

Do you own the land yet?

 @Ronald what is "FAR"

@Tammy Renee Johnson - I'm walking through the same process. The expense to build a steel frame building right now is pretty high. I was looking at 1.5 acres (~40,000 sqft usable). It looks like I might be able to put about 8 units on it. There's a lot of factors such as setbacks, parking, water control, etc. Not as simple as 20,000 sq ft built on a 40,000 sq ft lot. 

For anyone that reads this, that has way more experience than me. Please reach out. Would greatly appreciate talking to someone.

Hey Guys,

I am a local investor with a few SFH's in Houston. Currently, I am looking to see about acquiring commercial land and building a warehouse or FLEX space. I wanted to see if anyone has done something similar in the Houston or surrounding area. Was thinking of buying 1 acre - 5 acre commercial tract in Katy or Richmond area and then develop 1350-1800 Sq/ft FLEX spaces. To be honest am unsure where to start after buying raw commercial land. Has anyone  done a flex space build that can guide. Would love to hear feedback from other members, builders and commercial brokers.
Thanks