I’ve owned and evaluated flex buildings with unit sizes ranging from 800 SF to 10,000 SF. The sweet spot, at least in the Carolinas, is remarkably consistent: 1,500 to 3,000 SF per unit.
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Measure your current unit sizes: Document exact SF of each unit. Know whether you’re in the sweet spot (1,500-3,000) or outside it (below 1,500 or above 5,000). -
Check market rent comps: Research what 1,500 SF units are renting for in your market versus what larger units command. The differential shows your opportunity. -
Consider splitting large units: If you have units above 5,000 SF, a buyer like Jim will factor in the cost to split them during valuation. Splitting before sale increases value but costs money and takes time. -
Document tenant mix: Track how many units you have in each size range. A portfolio heavily weighted to 1,500-3,000 SF units is stronger from a valuation perspective.
Why that range works
It’s big enough for a small contractor to run their whole operation. Park the truck, store materials, set up a desk in the front office. It’s small enough that the rent is affordable. At $10 NNN, a 2,000 SF bay costs the tenant $1,667 per month. That’s manageable for a one-or-two-person operation that’s billing $15K-20K a month in service revenue.
What supports stronger per-SF pricing
- Unit sizes in 1,500-3,000 SF range (the market sweet spot)
- Multiple tenants competing for small bays
- High rents relative to building average ($11-13 NNN is standard)
- Low vacancy because demand is broad and consistent
- Fast lease-up times when units turn over
What gives buyers leverage
- Units below 1,500 SF (not enough space for real operations)
- Units above 5,000 SF (tenant pool shrinks, rent power drops)
- Larger unit buildings require buyer to execute splits
- Split costs reduce buyer’s acquisition upside
- Limited tenant pool for very large bays
Go below 1,500 SF and you start losing functionality. There’s not enough room to actually store anything meaningful. The overhead door takes up half the wall. It works for storage but not for operating a business.
Go above 5,000 SF and the tenant pool shrinks dramatically. At $10 NNN, a 5,000 SF unit costs $4,167/month. That’s a real number for a small business. You’re now competing for tenants who have more options and more negotiating power.
The rent premium on small bays
Small bays command a significant per-foot premium over larger spaces. In most Charlotte area flex parks, a 1,500 SF bay might rent for $11-13 NNN while a 5,000 SF bay in the same park goes for $8-10 NNN. That’s 20-30% more per square foot just for the smaller unit.
The reason is simple: there are more tenants competing for small bays. Supply and demand. And small tenants have fewer alternatives. They can’t easily build out space in a larger building.
What this means for building value
A flex park with 1,500-3,000 SF units will almost always appraise higher per square foot than one with larger units. More demand, higher rents, lower vacancy, quicker lease-up. All of that feeds into a stronger NOI and a lower cap rate.
If you own a flex park with larger units, you might consider splitting them before selling. Or at least understand that a buyer like me will price the building based on the current unit configuration while factoring in the cost to split if that’s the highest and best use.
Seller takeaway
If your flex park has a mix of unit sizes outside the 1,500-3,000 range, call 704-600-3839. Understanding your unit configuration and how buyers value it can mean $100K+ difference in your sale price. Jim buys these across the Carolinas and knows exactly what the market wants.
Flex parks across Greenville and the broader Carolinas are in high demand right now. If you own one, I’d love to take a look. 704-600-3839.
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