We put in baby kennel while we painted.

Then also thinking I would be able to put a little away to build a small kennel to keep rescue dogs, and try to find them for ever homes.

@Tony Marcelle get out of your comfort zone and try calling some of these companies in your local area.  Build

Additionally, while meeting with realtors I began sending out some emails, cold calls (feelers as I like to call them) to builders in our area.  Builders

Go with what is already there if it is in a good area, building something is a lot harder to finance and you have to deal with a lot more permits and regulations in a lot of places.

The area I would say isn't a hugely desirable area, more of an older industrial area. Building

Thus, I am intimately familiar with the area/building/renters market. 

There were a lot of items that had similar cost that are not directly scalable with total sq ft, like HVAC costs (units are small, so there is minimum equipment sizes), plumbing costs, foundation cost, permitting costs, to name a few.The $90/ft2 had nicer exterior finishes (hardiplank vs vinyl, nicer windows, nicer doors, etc) due to historical area building restrictions.  

That's not a problem,  but sometimes it's not sustainable for that area/building without massive turnovers.  

I've financed dog kennels with a caretakers residential unit and it was acceptable since a caretaker had to be on the premises 24/7.I'm not sure if what you are proposing would work with the SBA 504 program.