This is a question about renting space, and not design fees.
I'm currently working on space allocation for a building where offices, retail space, and a warehouse will all use the same building.
There is some contention on who gets what. I am, full disclosure, part of the 'office' component, but have a direct vested interest in everyone getting what they need.
I have a feeling the hierarchy of values here is:
Office
Retail
Warehouse
I would cite as layman's evidence that highrise buildings tend to be corporate headquarters, etc, and that retail spaces tend to hew close to the first 2 floors in urban areas and more commonly 'stretch out' in the suburbs. Warehouse space is an obvious last place.
However, this is just a observation, and I hope someone can confirm or disprove it with some industry data, etc.
I understand there are a number of factors in this equation outside of simple $/sf values, and I am aware of them, but I am asking for this information to support one part of my argument.
thanks all, I appreciate any help you can offer.
sh
if this was in the interest of a developer, then the property value and how buildings are organized around the area will be a major factor.
location, location, location...rent will always be higher at a better location.
office building can be the cheapest component in an urban setting, per sf base, since retail can be the biggest rent maker in city such as nyc.
i have never seen a home depot or ikea type of retail with office tower above in the burbs, but u see them as giant warehouse/retail with loading/unloading next to the entrance. perhaps this is an example of retail/warehouse being the same rent/sf.
however, any retail require storage space, do you consider them warehouses? there are plenty of "big box" retail stores in nyc, i.e. supermarket, sporting goods stores, electronic stores and drug stores at the base of office towers. there are even entire "office building" used as mini-storage.
so i guess the rent equation u got can change dramatically especially when spaces are scares. it all depends on where it is and what are the rates of the surrounding spaces for rent.
also, there are so many possible ways of negotiating rent in an office tower. it is perhaps simpler for a company to rent all the office space in a tower/campus, but comparatively there are probably a lot more office buildings with multi-tenants in which many floors are divied into smaller components. i am pretty sure a smart renter will ask for a lower rent per sf if they got the shittier view of the building....just like any apartment buildings, not every sf of a class A office building is rented at the same rate when the floor is divided into smaller offices.
I know there are a ton of variables that control rents. Because we are talking about divvying up space in a single building, between different operations aspects of the same business, all considerable variables for each component are essentially equal.
hey wk! your question, what exactly is my question...
What I am looking for is a general, rule of thumb base, for situations with comparable variables. Something similar to below:
Warehouse space is worth about $(X) /psf.
Retail space is worth about $(2X) /psf.
Office space is worth about $(3X) /psf.
wurdan, nope, not too broad. I'd say that is about what I was looking for. If you have something I could cite, that would be a big bonus, but the info itself is the primary concern. And I agree with your warehouse/storage comment, but this will be genuine warehouse space, though geared towards receipt, coordination, and distribution of materials rather than mid to long term storage.
thanks again, and let me know if you have anything else.
i think you general assumption of the rate grade is logical in general, however i interpret your original post as "are there exceptions? and what are they"
wurdan's numbers seem very low, based the work i was involved with in the past. Rent for warehouse ranges from $20-$100/sf, Retail ranges from $800 - $1200/sf and office range from $500 - $1000/sf.
When all 3 are rented to a single tenant, there usually are negotiations for an average rate, but the developer will usually still want the lease amount to meet original his/her profit projections.
where is this?
what are the rent rates for the building around this new facility?
My numbers are based in Milwaukee, WI. From looking in newspapers, craigslist and calling for rent signs. Should be easy for you to figure out the same where you are located.
Even in New York, however, I'd be surprised to see office rates above $200/sf. Niro your rates seem out of whack. Unless of course you are talking in terms of pesos.
The calculation is generally made by multiplying the rate x sf = annual lease price.
So if I rented a 50,000 sf warehouse space in milwaukee at $6/ sf, I'd be paying $300,000 a year in rent.
Import to consider with any commercial rate is what is included. Single, double or triple net?
Your best bet would be to call a commercial broker for the area you are looking at. They will have the best information for you.
wurdan,
actually its not unheard of that retail/ office spaces rent for over $1500/sf
i happened to work on some of those....and yes its outrageous:
"There are reports that FAO pays just over $70 a foot for half of its 66,465 feet spread across three levels, but even in today's sour economy ground-floor retail rents can go for 20 times what FAO is supposedly paying.
According to the Real Estate Board of New York, retail rents in that area of Madison Avenue are $939 a foot, down 14 percent since last spring. Along Fifth Avenue, average retail rents run $1,531 a foot, down 17 percent."
relative psf costs of office/retail/warehouse space
This is a question about renting space, and not design fees.
I'm currently working on space allocation for a building where offices, retail space, and a warehouse will all use the same building.
There is some contention on who gets what. I am, full disclosure, part of the 'office' component, but have a direct vested interest in everyone getting what they need.
I have a feeling the hierarchy of values here is:
Office
Retail
Warehouse
I would cite as layman's evidence that highrise buildings tend to be corporate headquarters, etc, and that retail spaces tend to hew close to the first 2 floors in urban areas and more commonly 'stretch out' in the suburbs. Warehouse space is an obvious last place.
However, this is just a observation, and I hope someone can confirm or disprove it with some industry data, etc.
I understand there are a number of factors in this equation outside of simple $/sf values, and I am aware of them, but I am asking for this information to support one part of my argument.
thanks all, I appreciate any help you can offer.
sh
Hi SuperHeavy!!!
What exactly is your question?
if this was in the interest of a developer, then the property value and how buildings are organized around the area will be a major factor.
location, location, location...rent will always be higher at a better location.
office building can be the cheapest component in an urban setting, per sf base, since retail can be the biggest rent maker in city such as nyc.
i have never seen a home depot or ikea type of retail with office tower above in the burbs, but u see them as giant warehouse/retail with loading/unloading next to the entrance. perhaps this is an example of retail/warehouse being the same rent/sf.
however, any retail require storage space, do you consider them warehouses? there are plenty of "big box" retail stores in nyc, i.e. supermarket, sporting goods stores, electronic stores and drug stores at the base of office towers. there are even entire "office building" used as mini-storage.
so i guess the rent equation u got can change dramatically especially when spaces are scares. it all depends on where it is and what are the rates of the surrounding spaces for rent.
also, there are so many possible ways of negotiating rent in an office tower. it is perhaps simpler for a company to rent all the office space in a tower/campus, but comparatively there are probably a lot more office buildings with multi-tenants in which many floors are divied into smaller components. i am pretty sure a smart renter will ask for a lower rent per sf if they got the shittier view of the building....just like any apartment buildings, not every sf of a class A office building is rented at the same rate when the floor is divided into smaller offices.
thank you niro for you responses.
I know there are a ton of variables that control rents. Because we are talking about divvying up space in a single building, between different operations aspects of the same business, all considerable variables for each component are essentially equal.
hey wk! your question, what exactly is my question...
What I am looking for is a general, rule of thumb base, for situations with comparable variables. Something similar to below:
Warehouse space is worth about $(X) /psf.
Retail space is worth about $(2X) /psf.
Office space is worth about $(3X) /psf.
Warehouse space is worth about $(2-6) /psf.
Retail space is worth about $(12-25) /psf.
Office space is worth about $(12-30) /psf.
too broad?
I would also say that storage space in a retail building is not warehouse space.
wurdan, nope, not too broad. I'd say that is about what I was looking for. If you have something I could cite, that would be a big bonus, but the info itself is the primary concern. And I agree with your warehouse/storage comment, but this will be genuine warehouse space, though geared towards receipt, coordination, and distribution of materials rather than mid to long term storage.
thanks again, and let me know if you have anything else.
SH,
i think you general assumption of the rate grade is logical in general, however i interpret your original post as "are there exceptions? and what are they"
wurdan's numbers seem very low, based the work i was involved with in the past. Rent for warehouse ranges from $20-$100/sf, Retail ranges from $800 - $1200/sf and office range from $500 - $1000/sf.
When all 3 are rented to a single tenant, there usually are negotiations for an average rate, but the developer will usually still want the lease amount to meet original his/her profit projections.
where is this?
what are the rent rates for the building around this new facility?
My numbers are based in Milwaukee, WI. From looking in newspapers, craigslist and calling for rent signs. Should be easy for you to figure out the same where you are located.
Even in New York, however, I'd be surprised to see office rates above $200/sf. Niro your rates seem out of whack. Unless of course you are talking in terms of pesos.
The calculation is generally made by multiplying the rate x sf = annual lease price.
So if I rented a 50,000 sf warehouse space in milwaukee at $6/ sf, I'd be paying $300,000 a year in rent.
Import to consider with any commercial rate is what is included. Single, double or triple net?
Your best bet would be to call a commercial broker for the area you are looking at. They will have the best information for you.
wurdan,
actually its not unheard of that retail/ office spaces rent for over $1500/sf
i happened to work on some of those....and yes its outrageous:
"There are reports that FAO pays just over $70 a foot for half of its 66,465 feet spread across three levels, but even in today's sour economy ground-floor retail rents can go for 20 times what FAO is supposedly paying.
According to the Real Estate Board of New York, retail rents in that area of Madison Avenue are $939 a foot, down 14 percent since last spring. Along Fifth Avenue, average retail rents run $1,531 a foot, down 17 percent."
here is the full article, and as u can see the rates are all over the place based on location:
http://www.nypost.com/p/news/business/item_us8dGZIniXY1d5S6Zdi8FJ
interesting data:
http://www.cbre.com/EN/AboutUs/MediaCentre/2009/Pages/120209.aspx
Holy Shitcakes!
Well there's your range. $20 -$2000. Have at 'er.
haha, i'd say a cincinnati industrial park hews closer to the milwaukee market rates.
look at market reports from cbre, cushman wakefield, grubb ellis, jones lang lasalle, newmark knight frank, marcus & millichap, etc.
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