Most investors consider the building shape when evaluating a retail property. Does the shape of a building matter to both retail and industrial properties? Most people think about square vs rectangular on retail properties. The rectangular shape affords more frontage for store fronts and is therefore more valuable to retail tenants. Does this same theory apply to industrial properties?
I was recently approached by a borrower about doing a loan on square shaped light industrial building. The borrower felt he had a value on the building of about four million. He provided comparables to support his valuation on the surface. The transactions looked viable so I did a site inspection. After physically inspecting and reviewing the comparables, they were all built in the 70s of similar construction. Even though on paper the buildings looked comparable, there was one difference; the subject building was square and all the comparables were rectangular. This shouldn’t make a big difference should it?
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