Best use of 10,000 sq ft commercial space in popular downtown
I have an 18,000 sq ft building in a vibrant downtown area that sits on a 1.85 acre lot with 110 parking spaces in front. It is an old concrete warehouse with 12 foot ceilings that I converted into office/retail suites made up of 5 smaller suites between 1,400 and 2,800 square feet and one large suite that's 10,000 feet. I've leased out the 5 smaller suites and have the 10k ft suite remaining.
I did events in the 10k foot space for a year after the renovation, but the event space business was slow so I put the space up for lease. The space has attracted a lot of interest, but prospective tenants have been asking me to divide the space (into 4k and 6k foot spaces) and to provide a fairly generous tenant improvement allowance. I don't have a problem dividing the space, which will entail extending the plumbing and adding a new electrical service for the second space, but I don't have the liquidity to pay a TI allowance. Plus, with the cost to divide the space and pay the TI allowance, I wouldn't really net any income for the spaces until year 4 or 5 of the leases.
So I've been brainstorming to figure out the best use of the space. I've thought about subdividing it into 4 spaces of 2,200 sq ft or 8 spaces of about 1,100 sq ft to allow for smaller businesses. The area around me is booming with new multi-family and office building developments, so I've even considered building out loft style apartments inside the space and perhaps adding a second floor of apartments as well.
All that said, the area is becoming more and more popular all the time, so perhaps I should just be patient and wait for a larger tenant who want the larger space that doesn't require a ton of build out and TI allowance on my part. Anyhow, any suggestions and thoughts would be appreciated.