Build the office warehouse you want…well, part of it.
March 29th, 2010
As a veteran of the industrial real estate business for almost 19 years now, I have seen countless searches for the ideal building with no real contenders to fill the void. Many times when this happens, the prospect decides they need to build from scratch in order to get exactly “what they want”.
The often missed step here is finding a smaller facility with all the utilities in place for the existing office and then adding the warehouse as needed. Very rarely can you, especially in today’s market, build for less than you can purchase a comparable existing industrial facility.
For example, let’s say you need 100,000 SF of office warehouse, of which 5,000 SF is office. You could theoretically add warehouse to a 5,000 SF office building, provided adequate land area exists. While that is an extreme example, it is feasible. The more realistic alternative to this scenario is locating a 20,000 SF + office warehouse with extra land and adding the warehouse area. This size facility is more likely to have the office area, parking and electrical service you will require for your ultimate layout.
Why can this be cost effective? An existing facility with offices, restrooms and potentially other utilities such as natural gas, already has some of the more costly construction items in place. The cost to add office area from the slab up can be $45 PSF+. The cost to add plain metal warehouse can be as cheap as $15 PSF, including the slab! Not to mention your architectural and permitting should be a breeze compared to full drawings for utilities, office, curb cuts, etc. You may still have to cover detention for any increase in impervious coverage on the site and its related drainage.
So open your mind to smaller properties with the office you need (or close) with immediate warehouse expansion in mind and you may save a substantial amount of time and money. Hire a qualified commercial real estate broker…preferably one with some development experience.
Eric Hughes
Eric@commercialrealestatebrokerhouston.com
(713) 744-7402 office direct
(281) 236-9553 cell
Categories: Building TIPS
