800,000 SF OF MODULAR, SINGLE STORY FLEX SPACE, EDISON & PISCATAWY, NEW JERSEY
There are two prime keys to great value creation in single story, modular flex space development. 1. Location: The importance of location to all real estate is no secret. The denser and more affluent the surrounding population, the better. The more visible and accessible is the site, the better. 2. Parking: The importance of ample parking, is not so obvious when it comes to development of light industrial, single story flex space. Local zoning usually requires only two parking spaces per 1,000 square feet of building under roof. So of course the developer’s first impulse is to go with the minimum requirement of two spaces per 1,000 square feet, so that he can build the maximum square footage on the site. This can be a big mistake. True, the initial uses of the space may be light industrial or distribution with ancillary office and two car parking per 1,000 square feet of building is sufficient. But if the location is right, then the subsequent uses of the space may be 100% office or retail or church, or day care or gym or call center – and these uses require four or five parking spaces per thousand square feet of building. The rent may be $6 net per square foot for industrial/distribution use but may be as high as $25 net per square foot for some or all of the alternative uses that require more parking. The lessons we learned were buy the best locations, that eventually accommodate a higher use and allow for four or five car parking per thousand square feet of building.
The 800,000 square feet of single story modular flex space that we developed is contained in ten buildings in disparate locations. Where we provided for heavy parking, in good locations, tenancy began as light industrial / distribution and rapidly evolved to retail, office and other uses requiring four and five car parking. Our development cost averaged $60 per sf. Rents initially averaged $6 net and moved up to an average of $12 net as tenancy evolved. No tenants occupied more than 10% of our modular flex space portfolio and leases were typically for one year although some tenants that did substantial improvements in their space were given five year leases.
The key elements of these buildings are: 1. Single story buildings, at least 22 ft clear under steel. Some tenants use part or all of their space for stacked storage so cubic feet is just as important as square feet. 2. In an 80,000 square foot building, space should be divisible into 5,000 square foot units of approximately 40 feet wide by 125 feet deep. Typically, the deeper the building, the more efficient is the use of the site. Conversely, if the tenant’s space does not have enough width, an awkward bowling alley type layout is the result. 3. Typically an office entrance and windows are at the front of each tenant space and one personnel door and truck loading dock are at the back. 4. Most important are strong locations and extremely ample parking. 5. Substantial electric power is a must. 6. Block surfaced with decorative, water-proof stucco, water-proofed split-rib block and tilt-up concrete panels can all be used effectively for exterior walls.