Flex Warehouse in Hampton Roads Virginia

[Dan V.]

We put an offer on an 8,500 square feet warehouse with 1,800 office space(s). The property can be rented as a whole or can be subdivided into maybe 3 tenants (each has its own office and warehouse). I'm wondering if anybody here is familiar with the space and see how's the demand for it in the area or in the region. We own another flex space but it's 3x smaller and it's doing well. The property is located in the Hampton Roads area in Virginia. 

[Patti Robertson]

I manage a small industrial strip in Virginia Beach that sounds similar. Ours is divided up into three units and they stay rented.  One is used as a Church.  One is rented by a plumber who runs his business from there.  The other was rented by a guy who has a hobby of rehabbing cars and just wanted warehouse space.  Small spaces rent quicker than large spaces. I would recommend dividing it up.

[Abhi Acharya]

@Dan V., congrats and good luck. Smaller flex units are easier to rent and gets you higher rents but may see higher turnover. Multi tenancy will force you to structure your leases as Full Service vs NNN, so they are more management intensive than a bigger space with one tenant.

[John McKee]

I agree with going smaller. It will be easier to rent the smaller spaces. At 8,000 + you would be looking at a special user which will be hard to come by. However you could go NNN by having 3 tenants pitch in for common area maintenance which can include parking, roof, landscaping etc.

[Dan V.]

Quote from @Patti Robertson:

I manage a small industrial strip in Virginia Beach that sounds similar. Ours is divided up into three units and they stay rented.  One is used as a Church.  One is rented by a plumber who runs his business from there.  The other was rented by a guy who has a hobby of rehabbing cars and just wanted warehouse space.  Small spaces rent quicker than large spaces. I would recommend dividing it up.

Thank you for your input. What are the terms like (NNN, Gross, etc)? Also, what's the going rate now for spaces like that? I'm seeing around $6.00 for NNN and $1.25-$1.50 for operating expenses in that city. I may reach out to you once we have it under contract to help us find tenant(s).

[Patti Robertson]

I'll DM you.

[Dan V.]

@Abhi Acharya and @John McKee Thank you for your insights! It seems like subdividing it into 3 smaller spaces will get us more rent and will benefit the tenants as well since they will be sharing the common expenses. At my stage, I don't mind managing 3 tenants, industrial/commercial spaces are easier to manage anyways. :) 

[Ronald Rohde]

Quote from @Dan V.:

@Abhi Acharya and @John McKee Thank you for your insights! It seems like subdividing it into 3 smaller spaces will get us more rent and will benefit the tenants as well since they will be sharing the common expenses. At my stage, I don't mind managing 3 tenants, industrial/commercial spaces are easier to manage anyways. :) 

 Correct, smaller less sophisticated tenants are more return, more work. As you grow you'll want to either delegate management or get fewer tenants.