I’m making a huge leap. Looking for confirmation I’m not messing up.
I own a small business. It’s an escape room company with just two rooms. It was a test bed operation in my area. I knew I’d grow out of the space fast. 

I have an offer in on a new building. 12,000 sq feet between two floors both on grade level. I plan to add 5 escape rooms and an axe throwing bar in the upper warehouse area (4600 sq feet).

The thing is that the occupancy class is M (mercantile) and for my needs I will need to change part of it to A2 and part of it to A3. 

I have most of the issues worked out with my architect and the city building department who will be  approving the change of use. 

All in all I’m estimating 200k for the build and the building itself is 370k. 

My business plan supports the debt service pretty well, so I’m co rodent my roi will be ok. 

My biggest question is what sort of value increase do you see when a use class is changed and the building being brought up to the appropriate code?  I’ll have to update new hvac, some fire alarms (no sprinklers per architect), and adding bathrooms. The 200k build budget is for these purposes as well as my business build needs. 

I do almost all the work myself, so I keep my costs down.
[{"id": "extg80r", "text": "Without knowing the information that goes into a commercial appraisal, no one here can answer that for you.  Commercial real estate is highly specific to the area, property type and property.  You should talk with an appraiser or a commercial agent in your area.", "replies": [{"id": "extgg6u", "text": "Can I just call an appraiser?", "replies": [{"id": "exttxx3", "text": "It won\u2019t hurt. Be aware that a change of use is NEVER as easy as it seams, despite what the city and architect say. Keep looking or a space that is use by right already.", "replies": [{"id": "extwqgv", "text": "This is what I\u2019m learning. Thankfully the local inspector is available and he is the one that will approve the change. Two thirds of the building already meets A3 from a code perspective. \n\nI have a contingency in my offer that lets me walk free and clear I I want (have) to.", "replies": [{"id": "extyv8u", "text": "Make sure you don\u2019t spend to much on consulting team. Micro manage and make sure they are thinking of additional egress point and fire suppression requirements. And avoid having to do either if possible.  Inspector and architect may say one thing, plan check may say another completely different think.", "replies": [], "depth": 5}], "depth": 4}, {"id": "extz8n0", "text": "Yup. This is almost always a slow, slippery, and expensive slope. In my experience, municipalities like to be your friend right up until the moment where you actually need their support.", "replies": [], "depth": 4}], "depth": 3}, {"id": "exue4ke", "text": "You can, but they might or might not take the time to give you information.  If you pay them for an appraisal, they definitely will.  If you are buying the property, the bank will require an appraisal anyway.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "exu1v56", "text": "Commercial appraiser here. Get an appraisal as proposed under the extraordinary assumption that zoning will allow the change. Only need cost and sales comparison approaches. Could save you some dough on the appraisal. Otherwise, get with zoning and go through the motions for the change (helps the appraiser in the end anyways).", "replies": [], "depth": 1}, {"id": "exu5r2p", "text": "Depends. You are taking a brand new building and adding a bunch of use specific improvements to it that nobody else could use. So some may say you are not improving the building but making it worse from a reselling standpoint. Trying to find another escape room / ax throwing place to buy your space would be difficult thus it would be fairly hard to comp out.  \n\nAnother option would be to take a look at comps for the type of use it was, and comps for the type of use you are turning it into and see if there is a difference in sales price per sf.", "replies": [], "depth": 1}, {"id": "exun64v", "text": "Good advice here on this thread. I would say from my limited experience with just one change of use that $200,000 is not enough money. Especially for that massive amount of square footage. And when you\u2019re talking sprinkler (Edit: reread and saw no sprinkler. That\u2019s really up to how much your occupancy increases/fire department and how are you going to make money if you don\u2019t have volume?) and AC for a place that large, it will eat up a ton of that money. Then you have to deal with the aesthetic finishing of the actual business. Are you adding a bar or any refreshments at all? It sounds like a good deal for the real estate and I highly recommend buying when you\u2019re going to open a business but you will have your hands full. Is there any way you can expand only part of the building and work your way up based on the success of the business? See if finishing two escape rooms is going to support the rest? I don\u2019t know the specifics of your sitch.", "replies": [{"id": "exuuj2a", "text": "Great comment. \n\nThe HVAC is going to be the bear. I\u2019m guessing 60k. Adding the bathrooms won\u2019t be so bad because we are converting an already framed our space and the plumbing is really accessible. I work with this plumber already and he said it will only be a few hours of work for him. I\u2019ll finish the rest. \n\nThe downstairs (6k sq feet) won\u2019t need updating because it will be classed as A3 and we will have very low occupancy. The bathrooms there will suffice. \n\nThe question of doing this in phases has been asked. We have a few other more pressing questions before that, but I expect it to be answered in a week or so. \n\nThe architect told me that as far as change of use, this is the best case he\u2019s seen in decades. Most of the building is ready to go. \n\nThe biggest change is going to be the empty warehouse that will end up being the bar. \n\nMy dad, stepdad, and I are doing the majority of the build out. That part is actually easier than it sounds. We built my current place out pretty well and way under what others in the industry pay.", "replies": [{"id": "exvwpna", "text": "Ahhhhh you\u2019re opening a bar... :)\nLet me tell you, I did this, I did it on the cheap - amazing breaks on plumber ($10,000), electrician ($9000), architect ($3,000), drywall ($8,000), etc... for 2400sf - and let me tell you, this is a bear. Alll kinda of expenses, just for materials, are exponential the more sf you have. The fact that you\u2019d own it is great, rent is killing me. But had no other option, and property values here skyrocketed. So, if you consider the real estate an investment alone, and then scrap any dreams of the rest of it becoming an investment, I say go for it. Starting a large business like that, especially a bar, when you start to get into payroll and inventory is intense and anyone who asks me if they should go for it gets a \u201cyes, but, only invest what you\u2019re willing to lose. And then expect to lose twice that.\u201d \n\nHaha. I kid, but it\u2019s a reality. At the very least maybe consider waiting a little, (maybe give the property owner some earnest $ that can be traded in for a tab/credit if you actually go through with everything, or at your current spot), and look a little longer. Check out how other bars are doing in your area, and definitely go to some city council meetings to feel the pulse of your city council to see if they\u2019re going to start voting in mw increases or other taxes.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]