I have been thinking about an idea for a while and want to input. As a former contractor I have alot of friends who have small shops. Many of these guys have a garage or several garages to store stuff. Most garages are not tall enough to allow a van with a ladder rack. In order to get into a shop one usually has to rent larger spaces. I have been toying with an idea to have 4-6 1,200-2,000 sq foot shops, with a shared conference room and office area. It could even have a person in the office to help them(would cost extra), so I am trying to combine the idea of sharing office space trend while giving each tenant a secure shop area that is no larger than they need, and therefore better on there cash flow. My intital response in talking to people is for a 2,000 shop I could get 1200 month that's almost double per sq foot than the larger spaces, and makes it some the small shop can manage there expenses in the less busy times they encounter. Wondering if this has been done elsewhere or what your thoughts are?
I love that this idea is coming from someone in Indiana! I think your concept is solid, I would talk with those potential tenants you know and see what they think. Here in Denver the shared space idea has been used in many forms from micro offices to wood-working and welding. People will pay a premium $/sf for something small if it is more affordable, and many people who can afford something like that can't qualify for a traditional 3-5 year commercial lease on their own space.
The hassle with something like that is the administration & management. Collecting rent from multiple tenants, dealing with property repairs and issues, controlling access correctly, but it can be done. My old company developed several large industrial buildings into artist studios and micro offices. I'd be happy to chat further with you.
@Micki M. I know from the contractors I know and talk too that there is a market for this, I just wanted to reach out to see what the thoughts were on BP. Correct on premium per sq ft which is why I started to look into this. We have shared office space, and some people split larger shops, but there is a trust issue with lots of tools out in the open.I think its a solid idea. I further have thought about making the shop a storage lease (if my attorney allows it) if they dont pay all there tools go to auction, and more importantly locking them out I think you would get fast rent money. Thanks for your input.
I sounds like a good idea. I've seen some share offices and artist spaces here in Chg,
Were you planning to purchasing a building or lease optioning a distressed one and then dividing it to rent out?
I think this is a very interesting idea. And if executed properly might be a solid niche. I would be interested what your attorney states about the storage facility classification. Also financing will initially be difficult even with your local bank. But I would imagine a 10,000 sq/ft industrial building isn't too expensive in Fort Wayne, IN but still you would need to service the debt or account for a cash purchase in the beginning. If you set it up properly, offered payment through credit card, & could attract tenants then I think it could work.
The hardest part would be attracting tenants in my opinion. You might have long periods of vacancy and high turnover. Small contractors can have a lot of ups and downs. Maybe you expand the contractor base, install a car lift, lease out the lift (include in your insurance policy) to mechanics & do-it yourselfers, etc?
At the end of the day you will have to be committed to it's success. It's not like you can hire a property manager to take over if you can't keep up. So make sure it's something you want to put your time towards (or you have a solid backup plan for the property). Good luck!
@Chris Winterhalter thanks for the input, my backup plan was to install a lift and one could have a line of small mechanics waiting. I am getting great feeedback from locals on the idea, and might venture into later this year.
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