ᐅ 8000 m² Mixed-Use Commercial Space – What Are the Best Ways to Utilize It?
Created on: 9 Feb 2020 16:57
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benno77
Hello everyone
Here is the situation: my parents own a plot of land of about 8000m2 (of which approximately 6500m2 (70000 sq ft) is within the building boundary) in a suburb of a medium-sized city (a little less than 100,000 inhabitants) in a metropolitan area. Currently, they operate a gas station there among other things. They now want to retire and close the business. The question is: what should we do with the property? It is mixed-use commercial (up to 3 full floors, 1.2 floor area ratio, 0.6 site coverage ratio).
From my point of view, there are four options:
- sell the entire plot (either as a whole or in parts)
- rent or lease it out
- use the property ourselves for commercial purposes or real estate
- a combination of options 1 to 3
My current favorite:
lease about half to a retailer (long-term lease, secure income – there is general interest from several large chains).
On the other half, build one or more residential complexes with as much living space as possible and then rent them out (for example, about 40 units on 3500 - 4000m2 (38000 - 43000 sq ft), rental price around €8.5 per m2 (about $0.90 per sq ft)).
Of course, selling outright is also an option (official land value about €250 per m2 (about $23 per sq ft)), but I am attracted to the idea of long-term capital growth from residential real estate combined with steady income.
What I would like from you:
- What are your general thoughts on the plan? Would you prefer a different scenario? Why?
- Specifically regarding the residential development option: what should I be aware of? Who is the best contact for this?
- Where can I find general information about the economical construction and operation of such a residential complex? What construction costs per m2 should I expect for a project of this scale?
- What is a reasonable timeline from now until the completion of the first/all buildings?
- Is it generally possible to purchase a residential complex of this size turnkey? What kind of workload should I expect as the owner during the planning and construction phase?
- Do the floor area ratio limits apply only to the area inside the building boundary, or is the entire plot the basis?
I know these are many questions, but as you can see I am still at the very beginning of my considerations and look forward to discussing this with you.
Thanks in advance for your feedback.
Here is the situation: my parents own a plot of land of about 8000m2 (of which approximately 6500m2 (70000 sq ft) is within the building boundary) in a suburb of a medium-sized city (a little less than 100,000 inhabitants) in a metropolitan area. Currently, they operate a gas station there among other things. They now want to retire and close the business. The question is: what should we do with the property? It is mixed-use commercial (up to 3 full floors, 1.2 floor area ratio, 0.6 site coverage ratio).
From my point of view, there are four options:
- sell the entire plot (either as a whole or in parts)
- rent or lease it out
- use the property ourselves for commercial purposes or real estate
- a combination of options 1 to 3
My current favorite:
lease about half to a retailer (long-term lease, secure income – there is general interest from several large chains).
On the other half, build one or more residential complexes with as much living space as possible and then rent them out (for example, about 40 units on 3500 - 4000m2 (38000 - 43000 sq ft), rental price around €8.5 per m2 (about $0.90 per sq ft)).
Of course, selling outright is also an option (official land value about €250 per m2 (about $23 per sq ft)), but I am attracted to the idea of long-term capital growth from residential real estate combined with steady income.
What I would like from you:
- What are your general thoughts on the plan? Would you prefer a different scenario? Why?
- Specifically regarding the residential development option: what should I be aware of? Who is the best contact for this?
- Where can I find general information about the economical construction and operation of such a residential complex? What construction costs per m2 should I expect for a project of this scale?
- What is a reasonable timeline from now until the completion of the first/all buildings?
- Is it generally possible to purchase a residential complex of this size turnkey? What kind of workload should I expect as the owner during the planning and construction phase?
- Do the floor area ratio limits apply only to the area inside the building boundary, or is the entire plot the basis?
I know these are many questions, but as you can see I am still at the very beginning of my considerations and look forward to discussing this with you.
Thanks in advance for your feedback.
We have the same "problem" with 8000m² (about 2 acres), but right in the middle of Dresden in a residential area. We have considered it back and forth a few times. Residential development is not financially worthwhile for us. Renting to other commercial businesses has so far been the best solution. Although we would also like to build apartments, renting to commercial tenants is much easier and even more profitable since we can use the existing buildings.
New residential construction would be unaffordable, and we also face an additional major issue with the foundation, which would significantly complicate things for us.
If "Edeka" and similar companies come knocking at your door, I wouldn’t hesitate. If they move in, you can relax on the couch for a few years. A distant acquaintance was able to rent his property to the military – he never has to lift a finger again.
New residential construction would be unaffordable, and we also face an additional major issue with the foundation, which would significantly complicate things for us.
If "Edeka" and similar companies come knocking at your door, I wouldn’t hesitate. If they move in, you can relax on the couch for a few years. A distant acquaintance was able to rent his property to the military – he never has to lift a finger again.
Thank you for your responses. I think the best approach is to talk to a few project developers and at the same time continue discussions with potential tenants.
What kind of project developers are suitable for this? How can I find them?
Retailers would of course not use the existing property but would demolish it and build new. Is such a scenario feasible under a lease agreement? What kind of income can I expect here?
What kind of project developers are suitable for this? How can I find them?
Retailers would of course not use the existing property but would demolish it and build new. Is such a scenario feasible under a lease agreement? What kind of income can I expect here?
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nordanney11 Feb 2020 07:28benno77 schrieb:
Retailers obviously wouldn’t use the existing property but would demolish and rebuild. Is such a scenario feasible as a lease? What kind of income can I expect here?You would have to handle the demolition and construction yourself. Retailers won’t do that. The lease amount depends on the location of the plot, who the tenant is, and the lease duration. For example, the entire plot could also accommodate a small retail park.
P.S. Gas station = potential contaminated site = expensive demolition?
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nordanney11 Feb 2020 07:29P.S. When renting from retailers, you can expect to pay about 11-25€ per square meter (per square yard).
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hampshire11 Feb 2020 09:21What interest does the local authority have in the development of your property? Depending on their stance, you can expect either support or obstacles. You will need to have some knowledge about this. Are you well connected locally?
benno77 schrieb:
I think the best approach is to talk to a few project developers..Yes, we tried that too. Just a word of caution: they move around millions quickly, but the projects often remain underfunded.Similar topics