I came across a deal for ~50 units of small warehouses (each 700-800 sq ft) and leases are around 1 year each. Is this typical to have 1 year leases and be treated more like a residential rental? Also, if I want a property manager, what type of company do I look for? This seems a little unque.
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
2y
For spaces that small, with minimal TI going in, I don't think that's crazy. You tend to see higher turnover when it's that small; good chance the property owner or property manager can't find people that a) only want 700 sq ft and b) are willing to sign a 5 year lease.
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
2y
For spaces that small, with minimal TI going in, I don't think that's crazy. You tend to see higher turnover when it's that small; good chance the property owner or property manager can't find people that a) only want 700 sq ft and b) are willing to sign a 5 year lease.
Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
2y
yeah you are likely looking at art studio/content creation type spaces or maybe some startup that needs a bit of storage or warehousing while they get going. Could be a cool asset if marketed and managed correctly. You're probably going to want to get a manager familiar with coworking or other such setups.
Real Estate Broker · Phoenix, AZ · Member since 2019 · 165 posts · 100 votes
2y
@Philip Hong I love this product type, it's in short supply nationwide. Primary reason is that it's not economical to building in today's market compared to a larger industrial building with only 1-2 tenants to manage instead of 30 smaller ones. However, the average rent PSF is often considerably higher as a result, at least in the markets I work in (Seattle and Phoenix). Yes, management is more intensive, and 50 units is nearing the size of facility that having a small on-site manager could be a benefit for oversight, management and leasing. Not required of course. One-year leases are very common in smaller spaces, as you're most often working with tenants in the trade industry that need a garage styled space for tools and equipment, some with a small 1-person styled office adjacent the shop. If possible, I would look at the building to see how easily I could merge 2 spaces together, providing a tenant a 1,400-1,500 sf space complete with a small 150-200 sf office w/bathroom, and the rest shop space. Having a minimum 10' bay door and adequate power throughout is helpful as well. What market is this property in and what is the population density surrounding it? Easy access to major HWY's and businesses?