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The Beauty of Ugly Buildings

Updated: May 16

Many CRE buyers are wooed by shiny amenities, especially those looking for the first time. They look for Class A buildings versus Class C. They can’t see the beauty of an ugly property. When I’m talking about ugly, I mean physically ugly and market ugly––those run down industrials.

Jeff gesturing to a commercial property in rough shape.

When I worked with John Allen back in the day, we mostly developed new properties, but every now and then, we would find an ugly building and reposition it. Most people who looked at it would think, “This mess is impossible!” I remember on many of those deals, John would say, “This is what makes us different. We’re developers. If it was easy, everyone would do it.”

Over the last few years, industrial properties have traded at better prices and cap rates than previous years. Sometimes, the land is the real underlying asset. So ultimately, value is value. Shine or not. Here’s what I’ve learned from the many ugly, not so perfect deals over the years:

1. Sometimes ugly properties have a ton of hidden value if you know what you’re doing. With older industrial properties, environmental is probably the biggest concern for investors. Having a great partner––an expert in environmental issues––will go a long way.

2. Run down properties can also come with headaches and red tape that can feel overwhelming. Don’t let all the question marks discourage you. There is a way. Get organized and develop a plan to tackle each issue. When I started, we did this all on paper. We ended up with overflowing brown expandable folders. Now our resources are online making it all much easier to handle––unless your iCloud account is maxed. 😳

3. With proper planning and deal structuring, many of those large ticket items can be figured out during due diligence. Work with a broker that has development experience and knows how to structure the best deal.

Person writing, "What's Next?" on a post it pad resting on a laptop.

4. Wise investors look at the future potential for the ugly property’s location. Use a broker that knows the market and can get the deals that aren’t easy, done.

5. Developers make an ugly property into something and that affects the community around it. Not only does it make the area look good and often bring up surrounding values, but productive commercial real estate sites bring jobs to the community. It’s also easier to attract employees within the community and bringing jobs close to home boosts the area’s economy.


Find a strategic partner that can invest in the property with you and be a guide during the process. After some strategic thinking and attention to detail, you’ll see that ugly property shine again. Embrace the beauty of ugly buildings.

Smiling Jeff Salzbrun

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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