There is a trap in real estate called "Over-Improvement."
You see it when a previous owner builds a 2,000 SF showroom with marble floors inside a 5,000 SF warehouse. It looks beautiful. It appraised high 10 years ago.
But nobody wants to rent it.
A plumber doesn't need a showroom. They need racking space. Every square foot of office is a square foot they can't use to store pipe and fittings.
The Vanity Trap
Heavy office build-out (40%+) attracts "Flex" tenants who are flighty and price-sensitive to office market trends. It creates "Functional Obsolescence."
The Utility Play
We demo the office. We strip it back to 10-15% (2 offices + bathrooms). We reclaim the warehouse floor. This immediately widens the tenant pool to 90% of the market.
The Demolition Dividend
It sounds counter-intuitive to destroy "finished" space. But if that space is sitting vacant because the rent per square foot is too high for a warehouse user, it has negative value.
By converting it back to raw warehouse, we might lower the "asking rent" per foot, but we increase the Occupancy and the NOI per usable foot.
We don't buy status. We buy flow. If it doesn't help the tenant move product, it goes in the dumpster.
