Hi everyone,

I will be possibly be acquiring a commercial property in a triple (large) parcel in Philadelphia. The property is currently under a NNN lease which has a good amount of time left. While the investment is decent with the current lease structure, the upside would be future development in 2-4 years. The area that this is in is rapidly appreciating with 300-400k SFH selling blocks away and great rental area.

With a mixed use commercial zoning, what are some rough estimates to build a 7-8 apartment units with 2 commercial fronts in Phila? I dont need exact numbers but trying to get an understanding of rough estimates for some back of the napkin understanding. Does 50k/unit sound reasonable building from the ground up? I already have costs to remove the current structure.

Any knowledge share would be really appreciated!

Originally posted by @Igor Messano :

Hi everyone,

I will be possibly be acquiring a commercial property in a triple (large) parcel in Philadelphia. The property is currently under a NNN lease which has a good amount of time left. While the investment is decent with the current lease structure, the upside would be future development in 2-4 years. The area that this is in is rapidly appreciating with 300-400k SFH selling blocks away and great rental area.

With a mixed use commercial zoning, what are some rough estimates to build a 7-8 apartment units with 2 commercial fronts in Phila? I dont need exact numbers but trying to get an understanding of rough estimates for some back of the napkin understanding. Does 50k/unit sound reasonable building from the ground up? I already have costs to remove the current structure.

Any knowledge share would be really appreciated!

You need to provide more details especially the size of the building/each unit. It may cost $100/sqft to build a B class unit. So a 500 sqft unit can cost $50k.. So many variables in building and development. Still need to consider soft costs like plan approvals, drawings, permits, tests etc..

Talk to local contractors, as building costs are highly localized. Add soft costs like architect, city entitlements, etc. Build quality, maybe even condos that can be sold off in the future. My WAG would be closer to $150-200 PSF. 

@Igor Messano

Agree cost building psqft is about 100-120 but adding zoning and drawings closer to 120-150 sqft