Office/Warehouse Property -- Investment Potential : Work Scope Questions
Hi There, r/CommercialRealEstate!    

We've recently located a ~9000k SF Office/Warehouse in a great location.  It's roughly 35 years old, bank owned, zoned commercial, being sold "AS-IS", and looks to be constructed out of masonry block with a large warehouse footprint in approximately one half, and the other half is separated into two floors which previously held rented office space.  The roofing looks like open web metal joists with some metal decking that needs some replacing.   

The structure itself, in our amateur assessment, looks to be of sound construction still -- the interior would need to be gutted to it's core and rebuilt as seen fit for whatever we determine should be there.    

The caveat!  This building was damaged by some flooding in the past and it's quite evident currently -- hence the need to gut the place.  It is situated close to sea level, and was a victim of a large storm in the past.    
     
Questions:    
1) We believe this property to be a solid investment, due to its size and location in the area.  Who would be the proper professionals to speak to regarding ACCURATE potential costs for gutting it to it's core and essentially making it a dry, empty shell of a building we can then assess with an architect in order to determine what future use we want with it?  Just a commercial contractor?     
2) Since the lot/building resides in a flood zone, who do we need to talk to regarding flood insurance?  A flood insurance company?  The town?  Will there be requirements to possibly RAISE this entire building like some residential units in town?  I'd think not, but how do we shape up and confirm these things?   
3)  Initial thoughts would be to have this as a retail/restaurant type structure.  If that is the case, wouldn't it be optimal to install as much mechanical, electrical, and plumbing entries on the second level?  Is this possible/allowed?  Who should we speak to in order to confirm such a thing?  Also -- who can we talk to to get a rough approximation on costs of installing MEP as such?    

Thanks for bearing with the amateur questions.  I'd like to think I can contact an architectural+construction firm locally to assess and provide some estimations from beginning to end, but I'd think we would have to OWN the property first, or is this a silly thought?   

Thanks for reading/putting up with it!

[{"id": "cok4g9p", "text": "1) Commercial contractors\n2) Floor Insurance company\n3) see 1)\n\nDo everything with your broker during due diligence. ", "replies": [{"id": "col91f4", "text": "Will they be willing to come into a property I don't own yet to assess?    \nDo everything with my agent?  Meaning...", "replies": [{"id": "cov9i0t", "text": "Contractors will be far more knowledgeable about what it will take from a nuts and bolts perspective on upgrades, retrofits, code compliance, ect. They should also be able to produce a number to give you an idea of costs involved as well. I would recommend find a contractor that is familiar with the type of building you are pursuing. Check their past work and maybe Angie's List. You don't want to bring someone green coming with you. Someone knowledgeable about the product you are looking at will know what costly items to look for.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "coupqk8", "text": "1). Size and location are important factors for consideration when investing in CRE but they don't necessarily justify an investment and certainly not a \"solid investment.\" Here's the real question: what is your business plan for the building? Once, you have an idea of purchase price, closing costs, costs to upgrade/repair, and what sort of rental income you can expect, then can you evaluate it as an investment with some sort of return on your capital and if it's worth it to you. Why is this building better than others? Who is your target tenant? What are you budgeting for Tenant improvement costs? Factor in time to lease ($0.00 rent), commission to broker (5.0% of base rent for lease term), and concessions: free rent, TI dollars, ect.\n\n2). To understand this building and this investment you will definitely need to do your homework especially if the building is in a flood zone - this building should trade under market prices for similar spaces not in flood zone. Buildings in flood zones have more risk (more likely to flood), sell for less because of this risk and typically rent for under-market prices because Tenant's don't want their businesses interrupted by floods. Also, if the building is flooded you should have someone check out the foundation of the building. Being sold \"As-Is\" that means it's your responsibility as a buyer to investigate. Along with having a contractor with you when you look at the building it sounds like you should have an architect and structural engineer look at the building. Masonry buildings often times require structural upgrades in cases of change of use - speak with you architect to confirm the current zoning and what might need to be done under your retail scenario. If structural upgrade is required get a number from a structural engineer. Often times a structural upgrade is too costly and can kill a deal right out of the gate. Between your potential foundation-work and structural work I wouldn't be surprised if your deal was dead right there. Also, if you are looking at a restaurant application you need to think about what codes you may need to meet; ADA compliance, energy, ect., speak with your architect. Also, you may need to install of a new HVAC system, can be very costly. Depending on how big it may require 3-phase power. All of these things are costly and eat away at your bottom line and are risks you should be getting paid for as a developer. \n\nFrom my prospective this sounds like a tough and costly deal to cut your teeth with. Sounds like you could be biting off more than you can chew if this is your first deal. You always need to do your homework when buying a building \"As-Is.\"     ", "replies": [], "depth": 1}]