Ready to build? Well take it from me, you really don’t want to be making costly mistakes. Luckily for you, I am a seasoned flex space real estate developer and I have learned A LOT in the past 8 years developing flex space. Here are 5 tips you can use for you first commercial real estate development:
1. Don’t Look For Frontage.
Because we are building industrial real estate, particularly commercial flex space developments, we are not actually looking for frontage. Frontage land for real estate is actually very expensive, much more per sqft than we should be spending. You can sacrifice street facing land for options that are cheaper and fit well into the criteria. By doing this, you can still get a fully leased out project (if you use the right strategies) and have a better ROI at the end of the day. Flex space is one asset class where you can get away with that, without sacrificing the project’s success.
Location is important, but is not the most important thing when looking for land for commercial flex space projects. A lot of people want to prioritize industrial business parks, or projects that are zoned industrial. I actually build outside city limits in counties that are nearby residential sub developments, and that is where I can get my permits pulled faster. This also means I’m thinking of my client, or the end user, when making location choices.
3. Make sure you’re out of city limits and in the county limits.
As I said, I build outside of city limits, I usually look for land 40 to 50 minutes outside any major city. The reason for this is so that my permitting process can be completed in two to three months as opposed to two to three years. Building in a major city is a major headache that is just simply not worth it, and takes much longer.
4. Land shapes.
When you start looking for land, you can feel a pull to buy perfect squares or exact rectangles, but it really isn’t necessary. In fact, I recommend going against the urge to buy picture perfect land parcels. It is just unnecessary when it comes to industrial developments. We can work with lands of any size or shape, in fact we prefer it. The reason behind this is because those parcels are often lands that other people cannot work with. Other asset classes have more rigid criteria for land shape and size. However, we can design beautiful commercial flex space projects on oddly shaped parcels and simultaneously make use of the discounted land price. A perfectly rectangular land with frontage is a whole lot more expensive than an L shaped one.
5. An important thing when developing commercial flex space are utilities.
You need to consider your utilities. You will need utility access on the street as well as to your land. This will cut down your costs significantly, and keep your building efficient. Make sure you have power, be able to tap in water, and sewer access. If you don’t have these things, they could cost you hundreds of thousands of dollars.
However, we can avoid these costs as commercial flex space does not use as much water and sewer as residential real estate. Sometimes, you might find a deal that you can easily connect utilities to, always check with your engineer and county/city before going forward. In fact, some properties can have well and septic systems connected, power however, is a must.
Some of these tips are not set in stone, for example, if you do happen to find land with frontage that stills falls under the minimum $/sq ft criterion, then by all means go for it. Frontage will give you a leg up in some cases, however, when it comes to developing flex space, the numbers are the priority.
If you would like to learn more about developing commercial flex space, subscribe to my newsletter to stay up to date on everything flex space, join my discord community, or fill out an interest form for my mastermind, Flex Space Untapped, to learn ALL my strategies on building commercial flex space.