I'm looking into buying a piece of land on which to build a multi-use music/video studio-type building (likely modular).

I'm having trouble deciding if the price is right and am looking for some guidance.  This piece of land available is 6500 Square Feet, and it's directly connected to an existing strip mall with 9 leased retail businesses.  The land I'm interested in is currently being used as excess parking and an Office Trailer.   The asking price comes out to about $12/sq foot.  

Any help with assessing if this is a good price?  Any other considerations perhaps I'm not thinking of?  Thanks!

Is the property located in PA? Depends on the town, and whether an appraiser was to use income approach or highest and best use, and I would probably imagine the latter, but even so, sounds like you may be overpaying. 6500sf is a tiny piece of land. Did you check on your approvals to make sure you can build a commercial building on it? That would be a huge factor. Lack of build-ability renders it worth nothing more than the parking lot it is being used for. Are you using it for yourself or what do you think you can get in rent on the back end when you finish building? 

Thanks Jessica.  Yes, it's in Philadelphia, PA and it's zoned for commercial so I can build on it.  I'd be using it for myself for at least the short-term,  but with fall back plan of leasing out or selling down the road if I choose to go that route.

6500sf is small, yes,  but more than adequate for what I'm looking to build.  The other retail stores in the strip mall it's connected to are about 2200 sf each.  

If it's in the City it might be a better value, but I still think it's high. The zoning is not really the issue, moreso ingress/egress, circulation, setbacks... some other requirements by code for building a building on a very small lot. Is the lot already subdivided from the other piece?

Yes, the lot is essentially a parking lot on the side of the existing strip mall.  And fenced in on the opposing side of the strip mall.   What aspects of the lot make you think the price is high?  I haven't done a land-only deal before, hence the help I'm looking for.  Would knowing what the current retail occupants are paying for their leases help?  And if so, is that info publicly available?

You need to build a land residual model. Super easy. Take your NOI and divide it by your developers cap rate (return on cost). This is your target return as a developer.

For example, here in CA for multifamily developers target at least a 6.0%-6.5% ROC. I'm working with a developer right now that is closing a construction loan and they are targeting a mid 7% ROC. 

Hope this helps.

I found out the lease rates for the retail shops in the strip mall directly connected to this land for sale.  They are going for $13 - $17 sqft.