So today was my first day back after a weeks vacation. Got a check in the mail for a fairly good sized job and a couple e-mails for other jobs from existing clients came in while I was away. Looks to be a busy swing again! Then I get a visit from the landlord that they just sold the building and I have a couple months to find a new place!!!
So I found this place through CL and I'm already looking on there now and my previous shop was through a friend. I figure I can use all the help I can get as this is going to be a tough one to pull off! Any tips tricks or advice for finding inexpensive space are welcome.
One of the tough things is that I can't shrink too much as I was previously getting ready to expand, and I also need 3 phase so that rules out some of easier spaces in small garages and such.
Hi Jeff, we just finished moving to a bigger space in the same industrial park but our rent per sqft went down as the ceiling is only 12' instead of 16', which is fine for me. What kind of machinery do you have? A rotary phase converter can be used where 3 phase is not available, but I have never used one. Where are you located. You may be able to get some good advice if we know where you are. Harold.
Ask your hardware rep. They know all the shops in your area and might hear of something. Call other cab makers in your area, they might have room/space while you are hunting or be moving to something bigger or smaller.
Jeff, don't be afraid to look at land. Owning shop is the best, a metal building on a slab is not that expensive. Initially more than renting, but long term you build equity, plus when you retire you have substantial real estate to sell. We all know how dismal selling a wood related business without the building goes..
Also, if you can afford to build - construct enough to rent out additional space to help cover overhead (mortgage, taxes, insurance). Good luck buddy!
We've just been hearing locally that an industrial section of an airport (airport was sold - new owners don't want anything non-airport related) here has just served notice to all tenants they have to pack up and leave. I've got a couple of friends who have worked shops there for 2 decades or more. I've offered them free use of my shop for any emergency completion of jobs should they need it (short term only!). I feel really bad for them - as well as you. But chin up, things have a way of turning out for the best, even though it doesn't always seem so at the time.
I should add that I was in exactly your same situation about 9 years ago. My landlord passed away and the family wanted to sell the property (giving me first dibs on the building I occupied). My rent (2,400 sq ft) was ridiculously low and I had been spoiled. I applied for a bank approval for purchasing my own building, meanwhile I looked around to see what was available for leasing. Wow! Spoiled rotten! All leased buildings (2k-3k sq. ft) were 5-6 times what I had been paying.
I was blessed to find a building that I initially looked at to lease (1/2 mile from my original shop location - same town) that was perfect (4k sq ft with 28' ceiling - enough to build upper levels). I offered to buy instead of leasing, the owner asked for a bid - with bank approval I was in contract within 10 days. Long story short - my mortgage is less than the rent I would have been paying! In 11 years I will now own outright (maybe shorter as I'm doubling up on monthly payments on those "good months".
So yea - look to own if you can. I went for broke between the costs of moving, setting up the new shop, etc. It was tight as hell the first year or so, but knowing it was my own building my wife and I were willing to sacrifice any/all conveniences/perks/vacations, etc. to be able to be free forever of those visits from a landlord "collecting the rent check" and ultimately the "you need to move" certified letter we received 9 years ago. You never know..
Oh yea, the reason I opted out of buying my original leased building was they wanted 3 times what I paid for the building I know own, which is double the size, plus the old building only had 12' ceilings and was broken into 3 rooms with different floor levels (negates wheels on machinery!). Yes, it was a block building, nicer than the metal building I now own, but it also had a flat tar roof. We all know the upkeep on those!
I looked at showcase last night though nothing so far. I'll look into some other commercial brokers today, though I feel like they may want to push to more expensive properties? Still….have to explore every avenue to find that hidden gem!
I'm currently about 20 minutes north of Boston, I moved here 10 years ago from my first shop which was in Boston. The majority of my work is still in the city so it's beneficial for me to stay somewhat close. There's plenty of cheap space if I want to move 1 hour out of the city, but every minute I add to my commute costs in time and gas. So I have to find a compromise between cost of space and distance to jobs.
Harold, I saw your thread and think it's great that your growing! I'm trying to stay optimistic about the move myself. I'll more than likely have to downsize a bit, but I may be alright if I plan things out well. Right now my space, (roughly 34' x 45') has a row of columns down the middle and low 10' ceilings. If I get an open floor plan it opens up better work flow possibilities, and higher ceilings could offer more storage.
I have mostly traditional woodworking equipment but all of it's three phase. The largest motors would be my wide belt which has a 25 hp motor, my cyclone which runs 7-1/2 hp and the 5 hp compressor which would all be running at the same time! So a rotary phase converter would be less than ideal as it would have to be huge….but not completely off the table.
I already started calling some contacts last night and will continue today. I hadn't thought of my sales reps though, that's a good idea!
As far as building that's not really an option for me right not. For one land is far less available than empty commercial space around here. More importantly I don't have enough resources or time available to me to take on something like that right now. I'm usually jammed right through spring into summer so I need to keep my downtime to a minimum. Just moving the shop I figure is going to take a couple weeks. I admire how Harold moved his shop with almost no downtime, that's a heck of a feat IMHO to plan that out so well! That however is not realistic for me. I have very little time to plan and move so it's going to be a bit of a work in progress at the new shop.
Jeff - I had a similar situation a few years ago. My leased 5,000 s/f was on month to month, and the landlord asked me to find a new home within 6 months. I put in an offer on a 6500 s/f bldg, but the guy took my earnest money and spent it, then refused to do the environmental work that had to happen before the bank would talk, etc. That deal sunk fast.
So I made the leap to a 8500s/f facility. This was 2005 and everything was hot and busy, so I felt I could make it work. The shop was beautiful, but too big, even though I could easily see us growing into it.
Well, then the world shifted, and our million dollar pipeline of work stopped cold. It was bloody for about 2 years....
The moral of this story? Heck, I don't know, but best of luck!
Jeff, it was relatively easy because I moved two blocks away and I was buying a second saw which was installed on the new place in advance. We moved our largest machines in one day and the electrical was already done in advance so they were hooked up the next day. We also had enough work that we cut , banded and bored in advance of the machinery disconnect to keep the assembly going. Technically we were not allowed to work in the new space till we had all permits approved, but the municipality was understanding if out situation . We were not a new company but an existing one that had to keep on producing. I had many sleepiness nights worrying how I was going to juggle orders , deliveries and moving, but that was my lack of faith in the good lord that takes care of us all. The human condition is to worry, but g-d has a plan and we just have to let Him do his thing and not get in the way. Harold.
Before my present location I was renting an old building. It had gone to month to month after the year lease ran out. One day the owner walked in, gave me a pc. of paper that said I had 30 days to clear out. Most of my tools were 3 phase and in this town they require fire sprinklers for wood shops over 2500'. Finding a space like that proved hopeless. Stuffed my equipment into a 3 stall garage and went to work for someone else until I could get my current shop. Rented it for a while then had the chance to buy. It was only slightly more expensive to buy than rent. There was enough land to expand the shop, If you some day decide to buy/build make sure you have enough land to expand. Moving is expensive!
I've done a lot of this sort of real estate exploration recently.
#1: Brokers are unfortunately a necessary part of the process. They know where to look, and might be able to suggest solutions you hadn't thought of. The good news is that they collect their fee from the landlord, not you, but this also means that they serve the landlords while pretending to fight for you. The CRE world is relatively small and tight knit, they all play golf together and talk about their accounts.
The caveat is that there are properties that are not listed, because the landlord prefers to self-market and not pay broker fees. These are typically found on craigslist. So, while a broker can save you a lot of time in your search, you also need to do a little of your own research.
#2: You get what you pay for. No way around it. Cheap = a location your customers will avoid, and/or a shady landlord. What if the roof leaks, will the landlord have a crew up there in the middle of a storm? I've heard of landlords who routinely screw their tenants out of security deposits, etc. and have a high-paid lawyer on retainer to silence them in court.
Regarding Evan's comment on leaking roof, I've been renting month-to-month for over 6 years after a 2-year lease, a decent space and close to home and cheap. 4 years ago after a hurricane there was a roof leak that landed on my wide belt sander. The landlord just shrugged and referred to the lease. There's a clause, fairly standard I assume, indemnifying him against any responsibility for damage to my property, no matter the cause. However there is also a clause clearly stating that he is responsible for the roof, walls and foundation. Fast forward to a few weeks ago when the 2 ft. of accumulated snow began to melt. A massive leak again landed on my sander, now through a related breach in the rubber roofing. Not only will he not take any responsibility for the problem, he likely won't spend the money to get it properly repaired. (It's raining here right now and I have to cover the sander and other machines nearby with plastic.) I left some nasty messages on his phone because he left the building on a Friday afternoon after the leak started, when he could have done something to mitigate the problem. Now he wants me out as a result.
Funny how insurance policies go--the first incident was not covered but the second one was, so this time I'm expecting to get a new feed belt, which had water sitting on it for 24-48 hours, over a weekend of course. As others have said, owning is best long term if you can make it happen.
Good points by Evan and Tony, however as with most things in life, there is gray area. I've been here for 10 years now and am paying about half of the going rate for space in the area. The building is in a working class residential area on the outskirts of a very affluent town. My landlord has been great as we understand each other….I get cheap space and I don't bother her! I fix my own furnace when it needs it, heck I fixed anything within the building that needed attention. She took care of the structure, as minimally as possible, but took care of it. I've spent a fair amount of money on the building over ten years, but still a fraction of the difference of what paying the market rate for space would have cost me.
So I guess while I agree in general that you get what you pay for, there are always going to be exceptions to the rule. It's an individual decision on whether it's more important to have a well maintained space and responsive landlord and pay for it. Or to take something a little more "broken in" and deal with some of the quirks in order to keep overhead down.
FWIW I'm going to meet a guy today who has some space in a very affluent town. He casually mentioned in our conversation the other day that he's got a bunch of sh*#ty buildings……I'm thinking this may be just the ticket;)
Jeff - When/if you do get a lease contract offered to you, do not sign until you counter with one that has everything you want. And that you understand all the language in the contract. They are written in a language that is favorable to the owner and the agents and the lawyers, but can be nonsense to an earnest business owner.
Most contracts will be extremely favorable to the owner in hopes that the naive and eager woodworker just signs and moves on. You'll be fixing his roof, mowing his grass, and painting the outside.
Just like buying a car, some back and forth is expected. By countering with your conditions you will stand your ground and they will have to get a bit more serious about leasing the building.
Another way to think about it is to project the next 5 or ten or however many years you plan to stay in the business. You can put 50 or 100k or more into your landlord's pocket over that span, or you can find a way to own property so that money stays in your pocket. In my case I'd like to move to a semi-rural area nearby where I can build a 2500 sq. ft. shop and continue a perhaps scaled back pre-retirement version of my current business. Since we are about to pay off our current home mortgage it makes perfect sense to me, but my wife, despite having an MBA, is highly risk-averse. Since she earns a good bit more money than I do, she gets to decide.
This may seem like an oversight, but what does your LEASE say about transfer of ownership? Your landlord might be telling you that you have to go (makes the building easier to sell to a non-investor), but the lease may say differently. While every lease is different, it is very common in commercial leases that the new owner's must honor the lease until it's expiration provided there are no violations. This would also include any renewal options provided in the lease.
If you do have to go, make certain that you new lease has a transfer of ownership clause in it. Also in my lease, I specified that I have the right of first refusal on any potential sale of my building. So if the landlord has a buyer, I have the right to buy the building before anybody else at the same price of any potential offer.
Don't be bullied into signing a bad lease or believe it when the real estate agent tells you a particular clause or covenant of a lease can't be changed. It absolutely can be. A good lease will be fair an equitable to both parties.
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