Commercial / Industrial Flex Warehouse space

[Derek Bell]

Why aren’t more developers building commercial/industrial flex warehouses? It just seems like a no brainer to me, but is that me just being naive? 

I am a developer/builder. I am soon to start a 20k sf warehouse. Either I am just really naive, or plain crazy, but I think the flex warehouse market is great. It’s not sexy, but its good business. 

[Ronald Rohde]

The main reason is that the returns aren't there for smaller/flex buildings. If you are able to develop and execute on time, on budget, then you may as well go build a much bigger building. Same effort, higher return.

With land prices and construction costs, the rents needed to justify such a new build are so much higher than current market rates. Its easier and more efficient for rents to increase on current supply than for new supply to be able to collect the premium.