suitable space to help them grow. In many cases these buildings
are in or very near older residential areas that can offer an abun
dant source of labour. Make no mistake, companies are relocating
to where the people are. This will become more prevalent as the
population ages, in order to find a work force. When you add in the
high cost of fuel for commuters, people will be quite happy to walk
if they are close enough to work.
What are some of the uses for these AR buildings? Can they be
converted and how do you convert them? First and foremost, a list
is available of the AR uses we have received from fellow SIORs
across the SIOR spectrum; this was presented at the SIOR confer
ence in St. Louis in November, 2007. For a copy of this list, or the
PowerPoint presentation, please send an email request to us and
we will send it by return email.
In addition to the list we can provide, here are some examples of AR
that might help you generate some ideas of your own. Remember,
with AR there are no rules; whatever makes economic and viable
sense is a good idea.
Convert a building to a selfstorage facility; offer a variety of
sizes; steel stud and drywall are usually sufficient. If people need
security, you can use concrete block and charge extra or provide
security in the system and charge extra. You can offer additional
services, such as boardroom, secretarial, courier, phone answering,
There are two types of incubator space; one is for start up compa
nies where they are coming out of their basement or garage, and the
other is for newer, or slowly maturing companies that are ready for
expansion. Once again, a variety of unit sizes and services can be
offered. If the building is large enough and unit sizes are flexible
you might keep a tenant for several years.
These buildings can be converted and used as first homes to
university students who may invent the next Google or Facebook.
Profitable Strategic Alternative to New Construction
For a business that is growing and considering new construction,
the purchase of a largerthanneeded existing facility can make
good strategic sense. In the case of an established manufacturing
business located in an inefficient, 200,000 squarefoot, multifloor,
100 yearold complex of buildings, their growth was pressing them
to become more efficient. While they were contemplating the con
struction of a new 200,000 squarefoot building (assuming that the
efficiencies of a more modern singlefloor layout would save the
cost of building a larger structure) we introduced the idea of buy
ing a 680,000 squarefoot property that was only 30 years old for a
comparable price. The advantages included faster occupancy, room
to grow, and the potential for income from leasing the excess space.
The client immediately moved into a 300,000 squarefoot space,
eventually growing to over 350,000 squarefeet (while avoiding any
additional construction costs, delays, or distractions) and enjoyed
a pricing advantage in their industry since their occupancy cost (as
a component of product cost) was lower than their competitors due
to the profits of the leased excess space.