Business and Industrial Incubators and Adaptive Reuse Projects
General Selection and Search Criteria
Types of Structures
Typically, good prospective incubator buildings will have been vacant or more than 50% vacant for 1 year or longer.
Older industrial buildings
- Dark or semi-dark retail with adverse demographics
- Some older or multi-story B or C office buildings
Seller/Owner Characteristics
Owner must be motivated at an 8-level or above
- Owner must be entrepreneurially-minded
- Owner must be flexible and open to creativity
- Owner’s Loan to Value should be less than 25%
- Or, if the building is vacant, the owner must be willing and able to carry the loan payment for up to a year.
- Or Owner must be willing to finance the building or wrap the small existing loan
- Or owner must be willing to enter into a long-term Master Lease with Option to Purchase (usually 5 years with one 5-year renewal option)
- Owner will usually be open to participation in the operating entity as a silent partner.
Building Characteristics
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Industrial |
Retail |
Office/Other |
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12,000 to 50,000 s.f. is needed for the typical incubator operation; Ideal situation is 100,000 s.f. or more with 2 or more traditional tenants in place and the rest open for new incubator space. Older, Multi-story is okay |
25,000 to 150,000 s.f. strip center; Multi-story is okay |
25,000 to 100,000 s.f. Multi-story is okay Vacant Churches sometimes work
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The typical incubator will house 15 to 35 new start-up businesses each occupying an average of 750 s.f. to 1500 s.f. for 1-3 years before they grow out of the space. The listing broker or agent is sometimes offered an opportunity to participate in the operation or to help with sub-leasing.