Economies of scale
Looking at a potential project and trying to bring current my ballpark assumptions for modeling purposes.
8 years ago, we built a 420,000 SF building for a user. At the time we were also building 100,000 SF for another couple users. My recollection was that the costs to build a +400,000 SF shell warehouse vs. a 100,000 SF shell warehouse, at the time, yielded economies of scale savings on the bigger building that were roughly about 30%. Has this changed much since then?
Specifically talking about building in the Northeast corridor, +30' clear height, 8' masonry walls with metal siding above, rubber roof, loading docks, etc. Looking for PSF building costs excluding land and sitework.
Logic says there is definitely a gradient of unit cost from a 100k warehouse to a 400k sf warehouse. I was trying to do a similar prelim analysis after just completing 100k sf'ers where pricing was locked in 18 months ago, however- the bids I have recently received to build a new 350k sf building in the same area is pretty much the same unit cost. It shouldn't be the same but that is where the prelim pricing that has come in. I do know that activity now vs 18 months ago is a LOT different. So, current market place conditions play a huge impact of course. For your scenario - the price you got in a recession vs now in a booming market may be big enough to offset most of the economies of scale you may be expecting.
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