Early Access Video: The Economics of Shop Space
Added 2022-06-11 11:00:04 +0000 UTCFriends:
In our final installment of the New Shop Series, we're getting into the deep water; the money. In this video, I break down every cost and expense associated with this big move. I also cover the hidden costs of having an independent shop and give detailed tips for finding affordable real estate for YOUR shop. This is a big, expensive change, but it might be more attainable than you think.
This video is a rough-cut, so some of the color is a bit off. We'll have that tidied up in a day or two.
Also, I'm currently visiting my wife's family in NC, so please excuse me if I'm late responding to anything. I'll be back in the saddle on Tuesday.
--Rex
Comments
You forgot to mention whether or not the new shop space is infested with shop fairies. Have you tried using a Veritas or LN tool yet?
Brandon DeYoung
2022-06-22 12:18:23 +0000 UTCRex. Really enjoyed this video and found it useful! Exactly at the point when I’m working toward starting a real estate investment business. Great timing! Hope you enjoy the new space
Martin
2022-06-18 13:49:27 +0000 UTCWow, rents here are just way over the top. A basic shop space here 800-1200ft2 is going for $2000+/mo. Which is something like $15ft2. We are in the middle of a building crisis here. There is lots of retail space for rent or lease, almost no office space. There are a few share spaces for office based startups, many with CDB funding. BUT, shop space is pretty much completely missing. Especially startup shop space. A few local big shops (eg the welding shop) has a bay for rent, usually 20-24 long and 10-12ft wide. Recently a developer built a strip shop space. It was completely leased out before they even got permits. Rising interest rates aren't going to help at all.
William Allen
2022-06-16 15:24:58 +0000 UTCSounds like a great deal! I live 30 miles north of San Francisco. Nothing with in walking distance. The best price I found for 800 square feet, full bathroom with shower and 3 phase power. Cost is $ 2100.00 a month 36 month lease. I don’t need the 3 phase power. I want to do work as a hobby. All by hand as Rex has been teaching all of us. I live in a townhouse with a two car garage to work in. I have to put my shop away every night to get a car in garage. As nice as it would be to move, it is still a stretch.
Blake Webber
2022-06-12 22:18:30 +0000 UTCThe first light industrial space I leased worked out to $7.20/sq ft/year. Rex you also mentioned that your landlord will not make improvements, but one technique that I was utilized several times is to negotiate an up front time for retrofitting the space to your needs. In the case of my first light industrial, I negotiated 90 days rent free for improvements after which I locked in a 24 month lease. The space I’m in now is the nicest shop I’ve ever had, and I found it on a whim. It’s 1800 sq/ft, 30’ x 60’, and I’m paying $4 per sq/ft per year. It has a full bath with shower, 12’ ceilings, all LED lighting, a 16’ x 9’ garage door, heated floors, 3 phase power, fully insulated. The electric is included in the rent, but we split the cost of the propane fill with the neighboring unit, which works out to about $150 year for us.
Austin V Papp
2022-06-12 14:03:14 +0000 UTCFor me Rex a fascinating look at an area I know little about. Thanks as always for the quality content.
The Super-wrench Garage
2022-06-12 12:24:29 +0000 UTCI'm thinking the wife's a teacher or nurse? Something that comes with benefits like insurance and other benefits?
Larry W Thayer
2022-06-12 11:09:47 +0000 UTCOn your videos I spend a lot of time looking past you to the edges of your space. This time I became fixated by your pencil holder. I need an organizer like that so I’m going to make one just like it. Where did you get those gray tubes. They look like material from a process piping or architectural model shop. That type of shop has been replace by 3D CAD software but it brings back memories. I’ll have to settle for some ABS pipe or plastic electrical conduit that’s comes in gray. My other thought about today’s video is that the new shop might not up your day to day cash flow but it could extend the life of the business. It is easy to see that staying in the basement is a dead end.
Richard C von Brecht
2022-06-12 02:51:13 +0000 UTCNice breakdown Rex. Every move seems to cost more than most people anticipate. Are you going to do a video of your finished shop space layout. Would like to see how your work flow came out. Take care, stay well and have fun in the new shop.
Matt Evans-Koch
2022-06-12 00:37:04 +0000 UTCI spent a while looking around here... and 20 mile radius around here... and... the cheapest I could find is $1600/m and it required a 2 year lease. I'd love to move into a small (400-800 sqft) building for $800/m - only in my dreams... or if I move states lol Great video though, and really got me looking and thinking! But, back to the backyard shed plans so I can turn my garage into a shop... one day. Thankfully my wife things garages in florida are meant to be basement replacements, our cars stay outside :D
Jeremy Denslinger
2022-06-11 21:34:18 +0000 UTCNicely done. I've learned that many commercial real estate rentals are based on the estimate of "$ per square foot per year". Before you rent anywhere, make sure that the rent on your place is reasonable compared with other spaces. You showed two spaces in the video: the old bike shop at $2500, and your actual shop. When we multiply $2500 * 12 months and divide by 1700 s.f., we get a result of $17.64 per square foot per year. When we do the same calculation for your space, $800 * 12 months / 2000 s.f., we get a result of $4.80 per square foot per year. Even if we include your moving expenses of $7181 into the price [($800*12)+7181/2000 sf], you're only at $8.39 per square foot per year. This is a great deal, at least by the standards of MY local real estate market... the local spaces that are comparable to yours, run about $6 per square foot per year (and commercial front-street retail start at $21-25). The fact that you can walk to your shop from home is an added benefit. I've had a workshop space for the last three years, and pay $8.10 per square foot per year. But we've moved to a new house, and the travel time and cost from new house to shop and back has made even that expense, not worth it. So the shop will come home at the next lease-end. Thanks for the insights, Rex!
Andrew Watt
2022-06-11 18:48:07 +0000 UTCI thoroughly enjoyed this video even though it had no relevance to my my life except it is in Cleveland. My sister lives in Cleveland and I visit it often and love the blue collar neighborhoods I have visited. So happy you found a place within walking distance from your home.
Jerry Kingzett
2022-06-11 15:35:06 +0000 UTCA very informative video! The audio still has some echo, but it is not bothersome or distracting.
Bob Templeton
2022-06-11 14:27:45 +0000 UTCif I had to move a shop as big or bigger than Rex's - I'd be buying plywood and 2x4s and making crates... when I'm done moving, I'll have extra "tables", storage units, and scrap wood. Well, maybe not at today's prices lol. And around here, you put out a call to friends and family "Moving! Free beer and BBQ when we're done!" and... well, you'll be BBQing that evening lol
Jeremy Denslinger
2022-06-11 13:40:57 +0000 UTCRates in some areas (like where I live) are only commercial if there's a business license. If you own a shop for your own use, not as a commercial entity, you can still be charged residential rates. At least for electric and gas. Water, sewar, etc are usually charged at the property's zoning. But, that's not to say that's how it is everywhere. Insurance can change greatly from area to area, insurer to insurer, and the level of coverage you want, and are required to have in your area. And then there's bundled discounts too. As an example, my wife and I had 2 vehicles insured at one company, the house at another. We had to get $1m of personal liability insurance for the solar panels we're getting installed (20kw potential capacity, puts us firmly in the electrical supplier category) - when we shopped around, we found we would be paying less with all three at one company than we were paying for the cars + house at the two companies. So... LOTS of variables with insurance.
Jeremy Denslinger
2022-06-11 13:38:12 +0000 UTCI found out that moving is when you call in all the people that you had helped in the past. Now moving a business is a huge pain. I have had to do it once and I packed up everything. It took about a month packing everything up in massive boxes. I found boxes that you could probably fit several bodies in, they were about $20 a box but you could fit a lot of stuff in them. I think when I moved my employer it was around 3k for the move with 6 guys after I packed up all the small parts in about 30 of those body sized boxes.
Boney Boards
2022-06-11 12:32:54 +0000 UTCReally awesome that the location is walkable from your home.
Todd Maurer
2022-06-11 12:29:29 +0000 UTCWhat about insurance? And utilities like electric and gas are billed at commercial rates, not residential.
Marc Barash
2022-06-11 11:25:31 +0000 UTCAll good stuff. Nice breakdown.
Tim Costello
2022-06-11 11:18:06 +0000 UTC
