For-sale industrial buildings are increasing in popularity

Jennifer Shubinski

Tuesday, Feb. 22, 2005 | 10:57 a.m.

The popularity of small for-sale buildings is not limited to the office market. Small industrial buildings also are popular with small businesses looking to gain equity and own their own building.

For-sale industrial buildings have been around for quite some time but brokers and developers said the niche market of buildings 35,000 square feet and less has gained in popularity over the past year.

"It's sort of like the industrial version of the first-time homebuyers," Arnold Stalk, managing partner of Metro Development Group LLC, said.

Stalk is developing the Carey Industrial Park in North Las Vegas for businesses that want to own their own industrial building.

The complex will consist of 26 buildings, ranging in size from 5,390 square feet to 11,550 square feet, and include yards. Prices range from $90 a square foot to $100 a square foot, Stalk said.

Stalk said several of the buildings are already in escrow to a variety of businesses, including a body shop and a commercial bakery.

"(The buildings) are very versatile in terms of the user," he said.

Low interest rates and the relative ease of obtaining small business loans are reasons for-sale buildings, both industrial and office, have gained in popularity, John Restrepo, principal of Restrepo Consulting said.

"There is a tremendous amount of for-sale office and industrial going up competing with the for-rent market," he said.

Dean Willmore, principal/broker of IPG Commercial, said people who buy small buildings are generally entrepreneurs who have traditionally been tenants in for-rent buildings.

"It is individuals who own their own businesses that want to create wealth for themselves," he said.

Willmore is representing the Lamb Business Park at Lamb Boulevard and Cheyenne Avenue that consists of eight buildings ranging in size from 8,000 square feet to 10,000 square feet. The developer is M&N Development.

Restrepo said many businesses that purchase a building try to lease out any balance of unused space to other companies.

"That's also a danger, whether or not they'll be able to lease it out," he said.

Jim Zeiter, managing partner of Insight Holdings, said he doesn't think owners of small buildings are very successful in renting out any unused portions. In the past year, Zeiter said he's sold about 20 buildings, a third that went to investors.

"It's not that successful, because a lot of users have the ability to buy their own properties," he said.

Zeiter has 18 buildings for sale ranging in size from 4,000 square feet to 35,000 square feet in three different locations, Cheyenne West Corporate Center at Cheyenne and Simmons Street, Parkview Center at Eastern Avenue and Sunset Road, and at the Alexander Pecos Industrial Center at Alexander and Pecos roads. Prices range from $75 a square foot up to $150 a square foot, Zeiter said.

"Out of all those buildings, we have nine nearing completion and six of them are sold; it's been very strong," he said. "There's really limited inventory out there for that size product."

John and Paul Sweetland of Sweetland Industrial Realty are tapping into a market for even smaller industrial buildings -- 3,200 square feet to 4,500 square feet -- at the Alexander Industrial Park. Clark McAfee is the developer and builder of the project.

"There is a good market for small freestanding buildings of high quality," John Sweetland said. "There is high demand for buildings for sale in almost all of the size categories, particularly in small entry-level type of buildings of this size."

All 18 buildings, including the four under construction, have been sold, John Sweetland said.

Six acres remain and plans are to continue with the for-sale industrial format, but perhaps in sizes reaching 10,000 square feet, he said.