Choosing New Shop Space

Deciding about shop size, distance from home, and the pros and cons of "condo" arrangements when searching for a roomier workspace. February 6, 2010

I have been in business for just about 5 years now, and the backyard barn that I built is no longer big enough. I built the shop at the time so I wouldn't have to find a rental, and could be close to home to help out with the kids. The shop I built was supposed to be larger, but we couldn't make it my ideal size due to lot restrictions.

Now that I have outgrown this space, I am looking at buying a building. The problem is that most of the buildings in my area are much too large for me, and therefore too expensive.

There are some "condo" type flex units for sale, but I am not real sure that those make sense. The thought of dealing with a condo association, and having neighbors that I cannot control, does not seem like a great situation.

I have seen a few freestanding buildings available within a 30 minute drive, but I was hoping to be closer to home than that. I am used to walking out the back door of my house 100' to the barn.

Does it make sense to buy a larger building than I need, and try to lease out the extra space for now, and know that I might grow into it down the road? I really don't want to rent if I can help it, and I figure buying a building in this economy may be good timing. Down the road, the building could be part of my retirement income when the real estate market turns around.

Forum Responses
(Business and Management Forum)
From contributor M:
It doesn't matter how big your building is. You will eventually fill it full of good buys that improve your capability and/or speed and need a larger building. I would definitely get the building that is bigger than I need - as long as I could afford it. Do not count on being able to rent the excess. I am getting ready to triple my space.

From contributor J:
I found that having a building about 20-30 minutes away from home has the hidden benefit of separating you from your work, just like normal people. When you are home, you are in family mode. When you are at work, you are all business. The transition time of the commute is a good bridge that also allows for errands coming and going. Hope you find something big and cheap!

From contributor S:
A 30 minute drive is just long enough to give you time to clear your head, and plan your day on the drive in. We used to be 7 minutes from our shop, and it was too easy to say, maybe I'll go back after supper and get some work done. Now we moved to an acreage, and I am never going to build a shop there. We are 25 minutes away and we even stop and have coffee with a bunch of other business owners on the way in.

I would not buy a condo style shop, because if you don't like the kind of business that moves in beside you, you are out of luck. Are you lacking storage space in your existing barn? Maybe you need a Sea-can, just to store stuff.

From contributor C:
I considered buying a condo warehouse unit a few years ago. There were a lot of pluses compared to renting. However, some of the planned condo association rules (it was to be new construction) were not exactly to my liking. For example, if the neighbors all parked their vehicles right by my unit before I got there in the morning, I would have to walk from the other end of the complex to get to the building that I own. Maybe that sounds petty, but it was annoying. There was no assigned parking. There were other rules regarding usage, signage, common areas, and more that I didn't like either. (Yes, I passed kindergarten and learned to share, but I didn't say I liked it!)

Another downside was the potential neighbors' businesses. If one of them ran a sloppy shop and their building burnt to the ground, guess what would happen to mine? It would be gone also.

I finally purchased an existing metal warehouse building that was larger than I needed. I thought about renting out the excess space but after doing a ROI calculation on the cost of dividing the building, adding new bathrooms, separate entrance door, new electric meter and wiring, etc., I decided not to rent it out. It would have taken a number of years to break even on the initial expense. Also, I still had the fear of my tenant being sloppy and the building going up in smoke.

And guess what happened with the extra space? I found lots of ways to use it. For example, I didn't have to worry about having enough room for that 5'x10' frame vacuum press table, or my CNC router. I even park my trailer inside (preventing break-ins or a disappearance). And it is nice to be able to load/unload the trailer without concern for the weather.

Another great feature is the property location. My shop is about 10 minutes away from my target market. I now have a place where my clients can meet me that is extremely convenient for them. And I can get to them quickly also, saving me lots of time. My old shop (building on my own property) was 45 minutes away. Clients never came to visit.

The downside to buying, of course, is the monthly mortgage payment. But in my opinion, it is much better than paying rent. And I am hoping the real estate investment is a winner also.

From contributor P:
Just moved back to my barn and have half the space. I was in a condo and the other tenants were a pain in the ass. Loading and unloading became a problem, trying to get people to move their cars, and loud music. Never got to put up my sign due to zoning. Always had people walking in looking for other people's shops. The gas was a killer and traffic socket, not to mention I never got to see my kids. I'm getting a container to store excess material. I love not having the overhead now that things have slowed. I do miss being closer to my suppliers, and next time I move the building will have to have a dedicated loading dock that I control, and no tenants. I would not build unless I was the contractor. I was driving 150 miles round trip, and I did enjoy the time to think and wind down.

From the original questioner:
Great replies - thank you! It sounds like the condo route is not favorable. Of course it is a less costly approach...

From contributor G:
I imagine that the insurance rate you would pay for fire and loss insurance would be based on the worst rated occupant in the building. Run that past your insurance agent before you join a condo.

From contributor L:
After renting for several years, I bought two lots in a new industrial park. We put up an 8,000 building intending to rent out half. Never got a tenant, but in a year decided to tear out the wall and add some employees. Didn't have a dock and the OHD's were only 12' wide. By then I had a forklift and could snake 16' lumber in, but it was not ideal. Things went well and a few years later we added another 6500'. This time it included 2 docks. At this point I discovered I should have planned for expansion better. A few years later I added 10,000' and a 16' door (should have been an 18').

I'm almost maxed out on the land now but could add a little more space - at a high premium, due to poor planning in the beginning. With each addition there were equipment moves and added electrical expenses that could have been reduced with better planning. I think there is an old Chinese proverb "one's junk will always exceed one's space." One of the few smart things I did was have OHD's on both sides of the building for good ventilation. The building is now paid for and I hope it will provide a nice retirement income.

From the original questioner:
Nice post. You sound like a guy I know who built in an industrial park, 10k sf, a year later added 15k, and a couple years later bought the building behind him. I don't have visions of becoming that large, although I guess you never know what is going to happen.

From contributor L:
I didn't have visions of becoming that large either (or I would have planned better). One thing to consider: it's a lot easier to get bigger than smaller. Nothing wrong with small!