Sell or Lease industrial warehouse outside chicago?
My brother owns a 12K SF warehouse in the southwest suburbs of Chicago.  He is entertaining options to either lease it out or sell it outright.  He spoke with a broker that estimated that he could probably get $100K annually, but said that he will likely have to do some improvements as part of the agreement.  To sell he estimated it would be upwards of $100/SF.  Either way he said that the property would generate quite a lot of interest.

My brother asked my advice because he can't decide between selling it and leasing.  He said that the idea of the income stream sounds enticing, but he doesn't want to step into a hornets nest of troubles.  Any advice from experienced pros?  He owns the property free/clear.
[{"id": "hxxkcxm", "text": "It sounds like you should consider talking to a banker and getting a line of credit secured by the property set up. Another option would be to find the mythical hundred thousand a year tenant, sign a NNN lease and give them credit for the improvements.", "replies": [{"id": "hxxl6qz", "text": "Mythical?", "replies": [{"id": "hxxlan6", "text": "Mythical as in the broker has yet to deliver them ready to sign the lease.", "replies": [{"id": "hxxmcic", "text": "HaHa! Brokers always have lots of tenants beating down their doors until you actually have your place listed.\n\nUnless the southwest suburbs of Chicago have a very low vacancy rate with very little warehouse space available the original poster's brother should be prepared for a lot more vacancy time than their broker promises.\n\nOriginal poster might want to do a quick drive through the area to check out age/condition of other properties as well as looking at the general business climate of the area.  Also look at loopnet to see what is available and what the \"asking\" price is to try to see if $100k is a realistic number.   Just looking at the $8.25 psf price, it would appear to be an area of low demand.", "replies": [{"id": "hxzceko", "text": "I'm not a real estate expert, but I did some digging around and industrial space seems to be in very short supply.  There is basically nothing available in the area and even flex warehouse space in places like Cubework are completely sold out with long waiting lists.", "replies": [], "depth": 5}, {"id": "hy28g8l", "text": "Market rents for actual solid B properties of this size are mid-$9 to mid-$10s PSF NNN, and there\u2019s a lack of quality small spaces. It all depends on what the quality of the asset is, as there\u2019s a lot of junk out there.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hxxkobp", "text": "\"Normal\" commercial warehouse lease has owner doing very little other than maintain the structure.  If interest is genuinely high he could triple net lease the building and have almost nothing to do except collect rent, make sure taxes are paid and insurance policies are up to date.\n\nI personally own some non triple net commercial warehouse/loft/office rentals in a major metropolitan area and there is rarely a reason for me to ever go to the buildings.\n\nI don't see the downside to keeping it, making some minimal improvements to make it look decent and renting it to a quality tenant.  Interview several brokers and deal with an experienced broker to get a solid tenant to minimize risk.\n\nYour brother will probably have to kick in a few months of free rent for the new tenant to make whatever improvements are needed for their specific business.", "replies": [{"id": "hxxmpex", "text": "The downside is what part of Southwest Suburbs.  Cook County taxes, permits, and fees could make it cost prohibitive to lease.  That may be why he is considering selling.\n\nIf the site is outside of Cook County, Will or Dupage perhaps, then he has an opportunity for better cash flow with higher margins due to less taxes &amp; fees.\n\nAlso maintenance and upkeep.  Does he have to orovide 24 hour security given the area the site might be located in.  Also, is it a dry warehouse, or is the site temperature controlled?", "replies": [{"id": "hxzccom", "text": "It's out in Will county, near Mokena and I-80 so the taxes are relatively low compared to cook.  It's a dry warehouse, pretty basic with office space.\n\nIt's way more space than he needs, he really is just looking for a small shop at this point for one of his side-businesses.  HIs problem is that he can't find anything.  His neighbor is leasing out his similar sized building to 4 different businesses that just basically use it for storage and shipping and receiving while he continues to operate out of there.  Do you think this is a viable  option or are there pitfalls?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hxxumnm", "text": "Never sell. Ride the cash flow and refi.", "replies": [], "depth": 1}, {"id": "hxyh0ea", "text": "If your numbers are close to correct, I'd sell if I was in his shoes.\n\nIt doesn't sound like it's your brother's dream to be a commercial landlord.  He should consider selling and doing something he wants to do more with the proceeds.", "replies": [], "depth": 1}, {"id": "hxynlan", "text": "Why not lease it, then sell?", "replies": [], "depth": 1}, {"id": "hxyuijj", "text": "Is there debt on the building?  That Impacts those numbers a lot.  \n\nIs it a 40s sheet metal building or 5 year old concrete tilt up?  Also important.\n\nIf it's in Cook County I would probably just sell if I could get that price.\n\nWithout good info nobody can help...\n\nHe can lease and then decide to sell later as a leased investment as well. If he wants the cashout", "replies": [{"id": "hxzcghs", "text": "There is no debt on the building, but he probably will need to make some repairs over the next 5 years (Roof, possibly HVAC).  He actually still needs a small amount of space, but not the entire building.  In a perfect world, he'd lease out the 12K sf and then find something smaller (1-2K SF), but there is nothing available.  The next best options for him would be leasing out a portion of the warehouse to other small businesses mainly for storage.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hxz4wkg", "text": "Lease it out on NNN and refinance.", "replies": [], "depth": 1}, {"id": "hxzgvay", "text": "Hi. I\u2019m in this space.  I\u2019m interested in buying it direct.  We could do a demising wall and separate the utilities so he could have his own space.  We could do a sale leaseback.", "replies": [], "depth": 1}, {"id": "hy0x9vd", "text": "I might be interested to buy if you had info I\u2019m a realtor as well", "replies": [], "depth": 1}]