Research & Development (R&D) property actually originated in California's Silicon Valley. When the Silicon Valley boom was going strong, they couldn't get space fast enough to build all the office buildings they needed. They had difficulty getting permits, buying land, and constructing buildings. Remember, office building construction is far more time consuming and costly than building warehouses-because of the interior finish work entailed, it's harder to do and takes much longer.
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What they did in Silicon Valley was to build very nice warehouses with dry wall and movable partitions on the inside, and call it R&D/Flex space.
This new construction alternative made it easier and faster to build a warehouse with a small office space rather than a formal office building. Most of these structures are one-story buildings with high ceilings, rear loading docks, and ample parking. If you are in flex space, you can combine office, light manufacturing, or even a warehouse into one space. Having no shared costs for hallways, bathrooms or a lobby means that you can get more space for your money, and rent exactly what you need. Companies are putting their staff into warehouses that are built as nice as any office.
R&D or flex space is becoming more popular today, given the shortage of office space. If you wanted to rent 3,000 square feet instead of 33,000 square feet, they might even be willing to do that. All they have to do is build a wall and add the ceiling. One of the issues you run into when you start building walls is fire ratings. You need to make sure that if you are working with flex space, you know the specific building codes and the applicable fire codes.
Flex Space Story (The following story is related by one of our real estate investment instructors)
I tear down walls, once a wall is built. However, tearing down a wall is a lot more expensive than building that first wall. The ceilings are all in now, but when you first built the walls, there may have been no ceilings.
Perhaps all the duct work and everything else in that section were still exposed. When you built this wall as a firewall, it was very easy to build it right up to ceiling. Now, you have other ceilings installed, so when you take down that wall, the first thing you must do is fix the ceiling. The second thing is-there's a place where there is no carpet along the floor. So, to rebuild the wall, you have to go through the ceiling, which is much more costly. So, all of a sudden, it's probably not flex space any more. Usually, it's flex space only one time. After that, the space takes on a more permanent quality.
Hope you enjoyed this article about R&D/Flex Space origins. Stay tuned for more interesting facts about commercial properties in upcoming articles.
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Investment can transform into a lucrative action when it is done wisely. Real Estate investing is one of the best options for you if you are looking to make a return profit on your investment. Moreover, unlike other assets like gold which is prone to frequent change in value, the change in real estate values is gradual. In this article we will be discussing the unchallenged benefits of real estate investment.
One of the greatest advantages of investing in real estate is that it can generate steady cash flow through rentals. It can cover your mortgages and tax expenses. Moreover, the flow is most likely to strengthen over time after your mortgages have been paid.
Real estate investors enjoy numerous tax advantages like break ups and deductions which ultimately reduces their taxable income. You can take advantage of a long period of tax reduction because you keep improving on your real estate investment throughout its useful life. Usually, you can deduct costs for acquiring and managing a property.
Real estate investors usually generate income from rentals, profits from property-dependant businesses, and appreciations. The value of a good property in the market is bound to increase over time. Investors can make a profit by selling the property when its value rises. Moreover, rental rates are subjected to elevation and are another way of ensuring profitable returns.
Equity is the difference of the market value of a property and the amount you pay for mortgage. Paying down your mortgage and building equity will give you leverage to invest in more properties. Investing in more properties will further increase your cash flow.
Real estate was no correlation whatsoever with other assets that you invest in. Furthermore, investing in real estate will diversify the portfolio of assets that you posses. This will reduce the volatility of the portfolio and will ensure higher return with lesser risk.
When you use borrowed capital or mortgages on an existing property in order to acquire another one, it serves as leverage. Leverage increases a property's potential return value. Moreover, since real estate is tangible and can act as collateral, financing is easily available for it.
The fact that real estate provides competitive risk-adjusted returns, serves as one of the greatest advantages of investing in real estate. These returns may vary depending on the location of the property, its asset class and how the property is managed. However, most investors aim at beating the average returns in the real estate market.
Real estate's capability of hedging inflations acts as a huge advantage of investing in it. The link between GDP growth and the demand for the property determines its inflation hedging capability. The demand created for properties increases the rental rates which in turn elevates capital values. Therefore, some of the inflationary pressure is weathered by rents and capital appreciation.
Another benefit of real estate investment is the existence of real estate trust. If you find yourself unprepared for possessing and managing a property yourself, you can rely on real estate investment trusts. It allows buying and selling of publicly traded properties on high stock exchanges. You can get in and out of du an an nhon green park these positions quickly if you trade in high volume.
Investment in real estate may seem intimidating if you are unaware of the advantages that follow it. Therefore, I have compiled a list of the advantages of real estate investment to help you make an informed choice.
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