Adding Value and Marketability to Existing Industrial Properties Through Roof Lifting

Specifically, investors and occupiers are desperate to find facilities that can be used for warehousing, logistics, and distribution… as well as manufacturing, cold storage, self-storage, and data centres.

Today, in the Greater Toronto Industrial market, we see two (2) major bottlenecks in the supply of product.

First, we are simply running out of space. Availabilities are – as everyone knows – in the 1-2% range and even lower when looking for something to purchase.

And secondly, a large percentage of inventory is outdated with lower clear heights, minimal shipping, smaller square footage, and overall, less efficient than the modern warehouses we see going up around the periphery.

Here’s why that’s important if you’re an investor or occupier of industrial space.

It is incredibly difficult and becoming increasingly expensive to perform the site selection process and go through planning and development. Further, purchasing an industrial property is not only becoming expensive but you may have to wait to find anything on the market. So if you’re looking to grow your business’ operations by finding additional space, there is no easy solution.

All of this means that it may be pragmatic to work with what we already have.

So how can someone leverage their existing Industrial property to create space and enhance values?

Well, this week I asked a good friend and expert in this field – Marty Shiff, President of Rooflifters, to weigh in…

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A Clear Solution to the Clear Height Problem

CUBIC SPACE

It’s a measurement that is increasingly more descriptive of the usefulness and value of today’s commercial and industrial space. With the rising costs of real estate and new construction, many building owners are looking at existing properties with a renewed vision on value. That value is often found in the amount of clear height within a building.

Image provided by Rooflifters

Although located in highly desirable locations, many times existing buildings fail to meet the specifications of potential buyers or tenants. One of the most common prohibitive factors found among commercial and industrial property in today’s maturing market is often a low clear height.

Simply stated, industrial and commercial property demands have outgrown the structures that are often found within a city’s urban centers.

There are millions of square feet of commercial space in every major city in North America that are becoming non-competitive.  Many of these existing properties have a location advantage of being near highways, airports, and urban centers.

The square footage of these buildings generally suits the needs of users. But the fact remains that the bulk of these properties suffer the same undesirable problem. Low clear height.

TAKING IT HIGHER

Yet, some real estate visionaries are seeing these building’s as the perfect investment opportunity by solving this problem. A clear solution to this dilemma has been to simply raise the existing roof of those buildings.

By modernizing the height of these under-valued properties, owners and users have been able to create value. Raising the roof is allowing the rejuvenation of buildings that have often sat vacant over extended periods. It has also allowed tenants, whose business growth is exceeding their current facility, to maintain their business operations without relocating.

Many industrial buildings were constructed at a time when you didn’t need anything more than 16-18 feet of clear height, now most of those buildings are functionally obsolete.

As a result of the value that clear height and cubic space, an increasing number of companies are turning to roof lifting as a solution. With few limitations, roof lifting can be applied to virtually any type and size of roof structure. In many cases, vertical expansion results in doubling or tripling the amount of usable cubic footage in a facility, all while keeping the entire existing roof and most of the services intact. Relocating, building an adjoining space, constructing a new building, and other traditional expansion methods are common, but generally more costly.

Expanding upwards offers several key incentives and advantages over outward expansion.

• Limited construction & material costs.
• No new land is required.
• Permitting process is much simpler.
• No heavy construction is needed.
• Increase usable space without increasing taxes or parking spaces.
• Efficiency and speed of roof lifting reduces down-time.
• Existing roof and attached ceiling systems remain intact and raise with the roof.

DEMAND FOR VOLUME

Over time, real estate has become so expensive that it’s rarely feasible to purchase a building, knock it down, and rebuild it in the same place. With changes to distribution, logistics, and consumer demands many of buildings in key locations that have low clear height are being re-evaluated.

In today’s real estate market, what good is an industrial building without volume? There are efficiencies when considering a typical 100,000 square foot building with a clear height of 18 feet compared to that same building once the roof has been raised to 32-foot clear height. Without changing the footprint of the original structure, lifting the existing roof provides more than a 75% increase in usable space. 

As businesses become increasingly innovative, it only makes sense that they pursue increasingly innovative solutions. It’s the reason industry professionals are looking upward rather than outward when it comes to the need for cubic space.

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We would like to thank our friends at Rooflifters for providing this insight to our readers.

For more information on how Rooflifters can help create the right clear height expansion solution for your property, please visit www.rooflifters.com or contact:

Marty Shiff

President and CEO, Rooflifters

marty@rooflifters.com

Rooflifters hydraulically raises the roofs of low clear height buildings to create inexpensive cubic footage catering to the industrial and retail markets. With over 30 years of experience, they are specialists in providing clear height expansion solutions and pride themselves on delivering outstanding quality and design for leading clients across North America.

Image provided by Rooflifters

CONCLUSION

We are all trying our best to stay afloat, and for many of us, our business means everything to us.

That being said, Owners of Commercial Real Estate in the Greater Toronto Area may or may not be well-positioned to push through the pandemic and its resulting shutdowns. Few, if any, of us could have predicted what happened, and it caught many of us by surprise.

The silver lining here is that the GTA is such a robust and in-demand market with a large ecosystem of Buyers and Sellers. And with our vacancy rates, rental rates, and valuations having hit all-time highs right before COVID-19 took place, there may be plenty of opportunities to find creative solutions; whether it be through rightsizing, refinancing, bridge financing, sale-leasebacks, or otherwise.

While there may exist challenges in execution, Buyers are ever more hungry for product. Local, high-net-worth developers and investors are often active in bottom-of-market conditions. And well-capitalized institutional investors and pension funds are still willing to take a look at a deal if the numbers make sense.

Finally, partial-leasebacks and right-sizing options also exist for those looking to reduce their footprint while raising some capital at the same time.

If you require guidance regarding your commercial real estate property or portfolio, please contact us.

Until next time…

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