Why Are Oakland Park Warehouses the Red Headed Step Child of Broward’s Industrial Market?

Written by smacke01 on December 9th, 2010

In today’s market where all business owners are trying to stretch their dollar as far as it will go, I think Oakland Park’s warehouse properties are the best bang for the buck.  For some reason Oakland Park is perceived as the Red Headed Step Child of Broward’s Industrial market and I personally think it’s a diamond in the rough for the true industrial class users.

It is in a great location between Commercial Blvd and Oakland Park Blvd east of I-95.  You have huge square footage buildings with super low rents compared to the buildings out by the Fort Lauderdale Executive Airport.  Granted, the buildings out by the airport are newer and more of a Class B building, which is probably a better fit for certain businesses.  But if you are a down and dirty, hard working, manufacturing business that is looking for good functional industrial buildings, I don’t think you can find a better deal than Oakland Park.  Yes, the buildings might be a little older, but they have everything you are looking for with tall ceilings, small units with dock levels, great east location and access to I95.  And Oakland Park has the most important thing for business owners…..CHEAP RENT.

Oakland Park Stretches the Rent Dollars

It’s no secret that Broward’s industrial market is hurting because of the oversupply of space and lack of businesses.  Over the past 3 years we have seen an incredible amount of construction related businesses shrink or just completely shut down.  In this government proclaimed “Rebound”, which I like to call Nothing Has Changed, tenants are trying to stay afloat by sharpening their pencils and really getting competitive on each estimate.  When there are only a handful of customers looking to redo their kitchen, it’s a dog eat dog world of rabid price competition.  Everybody is fighting for the same kitchen remodel and landlords are fighting for that same tenant that is thinking about “right-sizing” his space. I think we are in a game of Last Man Standing.  Over the past three years most of the fast money construction related businesses have washed out.  The only guys still out there are the nose to the grind stone, veteran hard working men and women who truly love the business and are going to succeed come hell or high water.  The get rich quick guys have all washed out of the market and we are back to basics.  These are the guys you want as tenants and if you are one of them, you are in high demand.

You Want to Be the Last Man Standing


These guys know their business like a dolphins fan hates the jets.  It’d just a way of everyday life.  They understand I need X square feet to operate my business and I can pay X in rent so I can feed my family.
You can get tall ceilings, dock level and street level buildings with easy access to I-95 for $8/sf gross.  That’s about $5/sf base rent.  You go out west to the prettier area and you are going to pay $8 triple net and tack on $4 in expenses for a grand total of $12/sf.  That’s $5000 per month rent check versus $3000 for the same space and maybe even better located to I-95. I know it’s not for every business, but if you are looking for big square footage for a cheap rate close to I-95, look in the Oakland Park area.  They are great rates for big spaces.

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BOYNTON BEACH WAREHOUSE CONDO SOLD!!!!

Written by smacke01 on December 1st, 2010

Ladies and Gentlemen, we finally have a sales comp involving a warehouse condo deal that was foreclosed on by a bank, and not just any bank.

Here is the building with the condo unit:

Heyday High Flier

The unit was a 5,962 sf showroom warehouse space with excellent frontage on I95, just north of Gateway Blvd.  The building is a great building built in 2003 and is a perfect example of the outrageous pricing warehouse properties were fetching during those times.  The unit was bought in March 2003 for $462,000 or $78/SF.  The next three years is when the real estate market went from sizzling hot to out of control, frothy, and bubbleiscious.   This unit was bought in October 2006 for $1,240,000…….that’s $208/SF!!!!!

Now for anybody that can do basic arithmetic, that’s a 170% increase in value over a 3 year period.  Talk about insane market.  I know for a fact the rents were not doubling and tripling as quickly to justify these sale prices.  That’s the telltale sign things are getting out of whack.  Dumb money was flooding the markets, including the warehouse properties.  To give you an idea of how insane this number is, high rise condos on South Beach with Ocean views 30 stories up are selling for $130/SF today.  This warehouse sold for $200/SF…a warehouse.

Now for the crème on top, guess which bank made the $1,000,000 loan on the property?  If you need a hint, think the namesake bank that melted down in late 2008 that opened all our eyes to the house of cards we had all built.  That’s right; Lehman Brothers was down here doing warehouse loans.

Good Old Lehman Brothers

The South Florida industrial market might be entering the next phase of the real estate cycle.  This unit was foreclosed on by some remnant entity of the failed Lehman Brothers and was recently bought by an investor.  The investor paid about $70/SF, a 66% decrease in the price paid in 2006.

Million Dollar question: Despite the huge discount from the frothy high, did he still pay too much?  Can he find a 6,000sf industrial user? How long will that take?  When are banks going to start selling all the other REO warehouse condo units they own?

If you are in the market for buying a warehouse condo unit as an investment or the home for your business, call me.  I would love to discuss your options and give you my opinion on the current conditions.

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Boynton Beach Warehouse Goes Back to Lender in “Friendly” Foreclosure

Written by smacke01 on March 12th, 2010

We are still early in the commercial foreclosure cycle, but one warehouse building has shaken loose and gone back to the lender.  Its located at 1420 Neptune Drive, Boynton Beach.

All warehouse investors and owners should keep this property on their radar because the Lender has taken the 30,000 sf multi-tenant warehouse building back in a friendly foreclosure.  It is now back on the market for $1.71 million, obviously the amount they loaned on it.  The building is a great building in a good location right off Congress Ave between Atlantic Avenue and Woolbright.

Boynton Beach Warehouse

The Million Dollar question is: How Much of a Loss is the Lender Willing to Take?

The warehouse sold for $2.25 million in 2005, which is $75/sf.  The buyer obtained a $1.71 million non-recourse loan from this Lender and had a 100% fully leased building with the hopes of someday selling the individual condo units.  The market turned and took all his tenants with it.  Instead of re-fitting the units for new tenants or breaking the units into smaller spaces, like I suggested in previous posts, the owner just let it sit.  He couldn’t get any tenants to stem the bleeding and obviously he just tossed the keys back to the Lender.

The building is in good shape, but the individual units are not suitable for this market.  They are too big, too many offices in some, too few offices in others.  Its going to take some serious work and cash to get the building up and cash flow positive again.  You know the Lender doesn’t want to deal with this, they have no idea about operating real estate.  To give you an idea of how the lenders think, they don’t hire local brokers because they use “national brokers” that probably need a GPS to get to the building.   This deal is peanuts to them and they want out.

Can an investor buy the building, re-fit the units, and rent it in todays market and still make a decent return?

I know this area intimately because its in my backyard.  My guess it will sell for around $1 million, which is a good number that should return a 9-10 CAP once the building is re-fit and full, BUT will somebody step up and do it??

I will be watching very closely to see what happens with this warehouse because its going to be a Bellweather for the rest of our industrial market.  If it sits for a long time, the banks are not willing to take the necessary haircuts.  If it sells quickly, investors are back in the game and banks are ready to deal.

Warehouse Radar

If you are an investor and want to look at this warehouse I would be more than happy to represent you and go over the numbers, local market, rent rates, built-out cost, etc.  This warehouse is a great building and you have a chance to steal it from the lender.  Call me for more details.

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