Estimating Rent Per SQFT On Building w/ Open Lot In Back

2 Replies

Hey everybody! 

I'm having a hard time finding really good info on this while searching the forums. The deal I am buying is a commercial property. It is a large steel shop with two offices, meaning two businesses could operate out of it. In the back is a shared lot, a little over 21,000 sqft in size. It is fenced in and secure. I ran some comps and believe the building itself can rent for $8 to $10 per sqft now and $12 to $15 per sqft after some renovation. The part I am having problems with is the lot.... how much can the open lot (which is really just fenced in storage) rent for?  If a business wants to rent part of the building and needs the lot, would you charge them the same dollar amount per sqft as the building? I imagine it would be less... but how much? 

Any advice is appreciated! Thank you!

@Bryce Kammerzell typically the lot would come with the space if its obvious it’s part of the space and connected with a back door, driveway parking etc.

If the lot is totally separate from the other spaces then you could rent it out as lot storage for any number of uses appropriate to the area. 

You would not be able to rent by the square foot like the finished space. People will not pay a premium for a storage lot. 

You should be able to find other similar lot storage properties to get an idea of what the going rate is in your market. Check storage facilities that offer lot storage, Craigslist and also call some industrial brokers. 

The highest and best use is usually boat, RV and camper storage if the area works for that.

Thanks Greg! I assumed of course that it wouldn’t rent for the full price but that’s good info that you gave me. The one tenant I have interested is a roll off dumpster company who wants the office space plus the lot to store containers. I figure I would charge him a little bit less per container than I would charge per RV or camper. But I would want to charge him something even though the shop has a back door leading directly into the lot. If he takes up the lot, that means I can’t use it for trailer or RV storage, so paying a little bit for the space seems fair. 

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