OPINION: New Factors Have Sprung Up In Purchaser's Acquisitions Evaluations

As of Q4 2021, current construction costs for mid-sized industrial buildings containing an 80% warehouse square footage ratio to 20% office square footage ratio in the Detroit Industrial Market were hovering in the $125 to $175 per square foot range, a large increase in recent years. The primary mechanism used to obtain clarity about whether a building is the right fit for a potential Purchaser involves reviewing recently sold comparable buildings and comparing those prices to the subject property’s sale price.

OPINION: Now that construction costs have risen so drastically, I strongly believe that replication costs (the cost of building the subject property fresh) should be factored into a Purchaser's decision to a considerable degree.