Over the last two blogs, I talked about what to consider when looking for the right warehouse space for your investment portfolio or business. This week, I want to discuss five practical issues. After 30 years in industrial, I’ve probably seen it all.
1. With the boom in industrial construction in the metro suburbs, the tight industrial warehouse and distribution market is easing…somewhat. However, those looking for spaces 10,000-12,000 SF still face challenges. Warehouses 200,000 SF and up are not set up to demise like older buildings. Demising walls used to be more affordable, but they’re flat out expensive now. But if you’re lucky, leftover, unleased square footage may be a way to get into larger, new warehouses. An experienced and connected broker can help you find those opportunities.
2. Find existing space that could work is the best option in this market. You may have to let go of must haves or creatively make do. Tenants and business users that want interior changes face long construction delays and increased expense. Back in the day when we’d build new warehouses, two docks/drive-ins in every bay was standard. That’s not always the case now. However, if you need to, docks, drives, and ramps can be added to most buildings.
3. Because rules and regulations vary from city to city, you might benefit from a move across city limits. You could be looking at two exact warehouse boxes, but by having broker insight into city regulations, you could save hundreds of thousands of dollars regarding your use and the city’s requirements. Know what they are and see if you can work within them. For example, a city may require air make-up systems if trucks pull into new construction. But in existing buildings, no one may care. Or one city requires something the next city over does not.
4. It’s best to plan a year out when looking for warehouse space. We used to build shells that allowed for quick moves. I think my record on a complete build out, from shell condition with permits, was 21 days. Our average was 30. No way that happens today. Connect with an experienced industrial broker early to position yourself for the best deal.
5. With warehouses, anything can happen, but there’s a cost. So it’s good to have realistic expectations. Get your needs and financials together, find the right broker to partner with, and be ready to move.
Jeff Salzbrun is the owner/broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.
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