On a recent “The Commercial Real Estate Hour” on KHTS, Host Jesus Henao of Leola Commercial, Inc. revealed what someone can expect to spend in construction and fees to build commercial real estate in Santa Clarita.

“I hear this all the time,” said Henao. “I hear, ‘Look, it’s so costly to do business in Santa Clarita or just LA in general.”

Henao endeavored to investigate this assumption by giving a hypothetical scenario that he wanted to build a 20-unit apartment building that is about 20,000 square feet inside city limits.

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“This is good for anybody that’s thinking about development,” Henao said. “And that’s what the show is — I want to educate people to give them an idea of what it costs.”

For construction alone, Henao estimated it would cost about $275 per square foot, making the project’s construction costs total approximately $5.5 million.  

Then Henao used the city planning division’s most recent fee schedule — dated Sept. 12, 2018 — to estimate how much he would pay in fees to complete his project.

First, Henao would hire an architect to make general plans to submit to city officials for review, which currently comes with a fee of $1,389 — a refundable cost if the project moves forward, according to Norris Whitmore of Norris Construction.

About a month later, city officials will either reject the plans or approve them with a detailed list of conditions, according to Henao.

If Henao decides the conditions are feasible and that he wants to continue moving forward with building his apartments, there are a number of fees due to the planning division before construction can begin, he noted.

Henao said that for his project, he would pay 10 percent of the contract value for an Environmental Impact Report, which would total $550,000.

Then he would pay $2,470 for the initial study fee; $6,795 for a conditional use permit; $1,150 for an architectural design review; $982 for a landscape plan and check inspection; $3,268 for a hillside development review; and $987 for a sign review.

“So before we even get into this bad boy, I’m at $567,041 in planning fees, which comes out to about $28,352 per unit,” Henao said.

Whitmore added that this list doesn’t even include the bridge and thoroughfare fee, school fees, building and safety fees, fire department fees, library fees, parks and recreation fees and more.

“It just goes on and on,” Whitmore said. 

Whitmore went on to say these fees are “too high” and the reason that “the little guy” is typically no longer building commercial real estate projects like apartment buildings in town.

Henao pointed out that large residential developments can still be seen under construction around Santa Clarita, and asked Whitmore how these developers are able to afford the costs.

“The big developers, they get breaks on the fees because they’re building communities,” Whitmore said, “but the little guy that just wants to buy a lot in town and build a project, … (it’s) very hard for him to make a living doing what he’s doing.”

Leola Commercial, Inc.

26575 Ruether Ave 2nd Floor

Santa Clarita, CA 91350

(818) 570-3301

Leola Commercial, Inc. is a boutique Santa Clarita commercial real estate firm that specializes in the sale of multi-family apartments, land for development, retail real estate, senior housing, tax credit properties, industrial, NNN and office. Headed by Jesus Henao, the Santa Clarita real estate firm prides itself on maintaining “old world” customer service principles and personalized representation. Henao is also the host of “The Commercial Real Estate Hour” on KHTS Mondays at noon.

Leola Commercial, Inc. – Santa Clarita

https://www.youtube.com/watch?v=TC7qWng0AkI

Leola Commercial Inc., Commercial Real Estate, Multi-Family Apartments, Santa Clarita Commercial Real Estate, Land for Development, NNN, Retail Real Estate, Santa Clarita Real Estate