Are these properties a subset within industrial ? Working on a transaction where Star Leasing companies is the sole tenant. Company Financials are solid but I dont have much experience with these type of facilities. Would be more comfortable with a tenant like Fedex. Anybody have any experience with these? Are rents higher than your typical manufacturing facility or distrubution warehouse? Harder to re-tenant? And because of the small square footage, the debt/SF is much higher than your typically industrial property so that is also making me nervous as a lender.
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There is a lot of land though, there is about 20 acres of land. Hoping the land value here is decent and can make us comfortable
The issue with truck terminals is that the PSF rents are pretty high because of the amount of land they require. You want to make sure you're in for the right basis in the event you need to tear down and build a traditional warehouse.
Because of the relatively high PSF rents they are slightly more difficult to finance (all in relation to traditional warehouse and dependent on location).
EDIT: Sorry just noticed that you are the lender here. Obviously it depend on your sponsor and if they have a history of making good buys in that space. Truck terminals are generally around ports or rail yards but can be anywhere depending on the businesses needs. If the property you're looking for is close to either of those it can easily be re-leased. If not it can still be easily re-leased but you'll need another tenant who has a reason to be there. The fall back is always land basis for warehouse conversion.
Truck terminals are indeed a subset of industrial. I have analyzed and acquired multiple truck terminals, so feel free to ask me anything as I have a fairly good understanding of them at this point.
'Per SF' measurements are incorrect in the context of truck terminals. Terminals are measured on a per door basis for almost everything. Rent is always on a per door per month basis or a whole dollar amount.
On a SF basis, rent is always going to be substantially higher and likely in the teens or low twenties per SF NNN. The last time I checked, truck terminals cost ~$180,000 - $200,000 per door to develop (>$250/SF), and they are almost always BTS. I have not seen any truck terminals trade at or above replacement cost, and practically nobody is developing them right now because construction costs are too high to pencil and municipalities will not permit them.
Like any specialized use, re-tenanting is going to be more difficult than your traditional warehouse/DC, but not impossible. It just requires a tenant that needs a truck terminal. I'd probably add another 3-6 months onto down time assumptions.
Lastly, expanding on SHB said, truck terminals typically serve as inter-modal facilities. Goods passing through the terminal stay there for a couple of hours at max. Outside of ports/rail yards, you'll see them in large metros or in sub-markets that have a lot of big box distribution centers. FedEx has a ton of them place strategically in very rural markets. With regards to getting in at the right basis in order to tear down, there is a 0.00% change you'd ever been competitive on a development if you had to tear down a terminal and build industrial. We just bought a truck terminal at >$425,000 per acre. It would make way more sense to sit on the terminal until you can lease it again.
Hey, thank you for adding color on the product type, this is very helpful. Have a question on the per door metric. The OM I am looking at mentions the truck facility has 124 "trailer spaces", Is that the same as the doors that you are referring to or do you mean drive in doors? In a secondary market (Atlanta, Cincinnati, Indianapolis), what do you think rent per door is? A rough estimate is fine. Thank you.
No, trailer spaces are parking spots for trailers. The amount of doors should be labeled as dock doors, or possibly dock high.
On rent, it is really tough to say and it varies pretty dramatically by building. Can you give me a bit of info on the condition of the building? Size in SF, year built, and amount of dock doors would be helpful. Feel free to PM me if you don't feel comfortable putting that level of detail in a public forum.
So I am curious since you mention it's for truck parking it seems near large facilities in metro areas. What is the I am assuming small warehouse (low lot coverage) used for? If all of the materials are in the truck and I have seen just large x acre lots where they park why is a small say 30-40k SF warehouse with dock doors needed if these trucks are just passing through and dropping off cargo at say a large Amazon fulfillment warehouse?
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