What We See That Other Buyers Don’t
Small industrial buildings are often passed over for reasons that have more to do with financing than with the real estate. This is how we read them, and where you can see it in our own deals.
Basis matters
We start with what we pay per square foot and what the building would cost to build, not with the in-place cap rate. A building bought well below replacement cost can absorb slow leasing, a soft rent year or a capital project and still work.
Across the case studies on our Track Record page, purchase basis runs from about $36 to $85 per square foot.
Function matters
A small, imperfect building still does its job for the contractor, distributor or light manufacturer who uses it, even when it falls below an institutional buyer’s size screens. We look at loading, ceiling height, office and site, not just the rent roll.
At 3540 E. Fifth Avenue the problems were condition and environmental history, not location or function. 55 New Plant Court is rear-loaded, with truck-height docks, 20’ ceilings and 9,500 SF of office.
Vacancy is priced, not feared
We size an offer against what a building can become, not only what it earns today. Several of our buildings were bought vacant or largely vacant: 3540 E. Fifth Avenue, and 29000 Information Lane in Easton.
At 1900 North Broadway the vacancy and the below-market rents were one problem: nobody had reconfigured the space for the tenant who wanted it.
Complexity can create mispricing
Vacancy, deferred maintenance, environmental findings and short leases reduce what a property can be financed for, not necessarily what it is worth. We underwrite the real estate, not just the rent roll.
At 3540 E. Fifth Avenue we worked with the Ohio EPA to implement vapor mitigation systems. At 55 New Plant Court the credit tenant had one year left, and that lease risk made the building hard to finance.
We do not need aggressive rent growth
The investment should work on basis, leasing and operations with realistic assumptions, not on a market that has to keep rising. At 7658 Fishel Drive N the rent is well below market under a long lease, and we accept lower returns over a 10 to 15 year horizon because the basis supports it.
At 9050 Red Branch Road, rent growth has been gradual because turnover is minimal. We have held it for the long term.
We own and operate
Oxford is a principal, not a fund and not a middleman. The capital is family capital and there is no investment committee, so the people who underwrite a deal are the people who decide it.
We underwrite, own and operate the buildings we buy, and we intend to hold them for the long term.
Have a Deal That Fits?
Submit an OM or rent roll and get a preliminary indication of interest within 1 business day.