The commercial real estate and construction landscape is evolving, and within the shifting dynamics lie significant opportunities. (See Forging Ahead: Construction Resilience and Opportunity in 2025.) As developers and investors navigate market uncertainty, one sector is demonstrating growth potential for 2025: Small Bay Flex Space.
Small Bay Flex Space is typically industrial-like buildings with individual bays ranging between 1,000 and 5,000 square feet. These units lend well to tenants looking for spaces to cater to their small businesses. These Small Bay Flex Buildings tend to be incorporated into multi-mix commercial development projects; however, they work in industrial areas, too. There is a wide variety of different types of businesses that need this type of space. Here is a list of different types of businesses that are often seeking out these small bay units.
Trades and Contractors: Electricians, Landscapers, Plumbers
There are several ways that these buildings can be structurally designed. The two main framing options are structural steel or light gauge steel, which provide the primary support for the building.
Pre-Engineered Metal Buildings (PEMBs) use rigid structural steel frames that can provide a clear span for the interior of the building. This means that there are no interior walls that provide support for the roof structure. Going with a PEMB design gives owners and developers flexibility to determine the bay size for each tenant's needs. This means that if each bay is 1,000 square feet and a tenant asks to rent two bays, the demising wall can be built to accommodate.
The other option for these buildings is for the framing to be completed using light-gauge steel, also known as Cold-Formed Steel (CFS). This is only an option when the width of the bay or unit is within range to support the roof structure. When this option is available, it cuts the cost of the steel building package down dramatically. However, the walls that are separating the units cannot be moved, as they are load-bearing and support the roof. This limits the flexibility to meet tenants' needs, but could be an option if the cost of construction is too much to go the other route.
The aesthetics of the Small Bay Flex space can vary greatly from project to project. The decision on how extravagant to make the exterior look depends on the type of tenant that is likely to rent the space and where the buildings are being developed. For instance, if the building is going to be developed in an industrial area and cater more to the construction or light manufacturing industry, then a simple exterior look may be completely acceptable. However, if the building is going to be developed on a main road catering to those who may have customers, then dressing up the look with a nice storefront and exterior building canopies may be necessary. It all boils down to who the tenant is likely to be and what their needs are. The possibilities and options are plentiful.
There is a growing trend of self storage investors adding Small Bay Flex Space to their portfolios. This asset class has many similarities to the types of tenants who sometimes rent self storage units. For instance, a small contractor could rent a few 10x20 drive-up units to store their equipment and materials. These types of tenants are great candidates for a Small Flex Bay Unit as their business grows and expands. There are also many developers who are incorporating these buildings into their self storage development projects. Some municipalities are not as favorable to self storage development; however, their city or town may have a great need for flex space. Incorporating these types of buildings into a development could sway a project's approval by the jurisdiction. The other advantage to including these buildings in a development is that the rent for them is quite a bit more than what can be charged for a regular self storage unit. If there is high demand, they could lease up quickly, giving the proforma for the investment extra cash flow while the self storage part of the development is in lease up. Another favorable attribute to mention about the tenants that lease up these small bay spaces is that they tend to stay for a while. That is, there isn’t a constant need to find a new renter for the space.
When considering whether to develop a Small Bay Flex Building, there are many considerations. It is essential to make sure that the right experts are on your team. At Forge Building Company, we understand these types of buildings and the plethora of options available. It is at our core to be that resource for our clients in helping them make the decisions that meet their investment needs. Many times, this may mean doing a pricing exercise to show the difference in the steel building design costs. We also have an exceptional drafting team that can provide a building layout, elevations, or even a simple rendering that illustrates the vision of a client. And lastly, we are aware of the pitfalls that can come up during the construction of these buildings. With this experience, we guide our clients around these, giving them a project that is delivered on time and within budget.
Contributing Editor: Melissa Anderson, Forge Building Company
