Please help analyze this sqft Small Warehouse Development Opportunity in Los Angeles

[Roland Mills]

Hi BP community ! I came across an opportunity to build a small warehouses. 8k sqft in an industrial area in Los Angeles Area.

I did some research, and the market price currently is about $300-400 per sq ft for industrial warehouse. While $400 is brand new building Nicely built price. 

To build a 8k warehouse with bricks, I'm getting rough bid around $175/sqft. , the lot cost is $110 per buildable sq ft. so the total cost will be around $300 / sqft. x8k = 2.4MM

While residential ADU building in LA (1200 sq ft ) for $200-220 /sqft, building industrial cost $175 ?

Is the building cost not making sense or the market ?

So the building cost is about the same as an older building. Is it worth the development ? or the building cost could be cheaper ?

Anyone with experience please help thank you !

[Ronald Rohde]

Quote from @Roland Mills:

Sorry not red bricks/. i mean concrete blocks.

I have never done commercial construction. I am planning to build the warehouse to use for myself. I have been looking for warehouse but there is not much inventory to choose from. 

I am ok to wait 1-2 yrs if there is a significant saving. But it seems like developing small project is not making sense now in this market condition.

So the Builder takes all the profits ? or the construction cost is too high currently?

The best strategy is to wait for the CRE market fall and buy a existing one ?

Thank you y'all for your valuable opinions.

 any fall has already happened. you're not going to see distressed industrial in LA county. Demand is too high. you'll be waiting forever. Find another deal