Benefits of Steel Buildings for Commercial Real Estate Investors

Published August 3, 2017 by Whirlwind Team


Guest post:  
Author Justin Havre is a Calgary native and owner of Justin Havre & Associates.

Investors who keep a close eye on the bottom line are no doubt aware of line item costs that relate to building construction and upkeep. From initial construction costs to ongoing maintenance, insurance costs and the need for periodic updating to attract and satisfy tenants, the budget might tend to spiral out of control without strict watch over expenditures.

However, steel-frame structures and pre-engineered steel buildings are designed for ease and speed of construction, durability and long-lasting good looks, structural strength and flexibility, and cost-efficient operation. Steel, as a building material, is non-combustible, resistant to mold, mildew, pests, and severe weather, making it a good choice for industrial and commercial uses. Insurance costs are typically lower for metal buildings than for other types of construction; upkeep costs are also minimal and the versatility quotient is high.


The evolution of steel

Simple steel warehouses have long been commonplace, but modern technology allows greater diversity, both architecturally and functionally, for steel buildings. The material has a history dating back to 1796 when an iron-frame flax mill was built in England. The first steel-framed skyscraper was built in 1889 in Chicago. Quonset huts, aircraft hangars and storage buildings expanded steel's commercial uses during World War II, and large-scale buildings today are invariably constructed of steel, claiming a 95 percent share of the industrial market. 

Approximately 71 percent of new low-rise commercial construction relies on steel, and that figure is growing due to the availability of pre-engineered design. Building efficiency statistics show that steel buildings can be completed in substantially less time than those using other materials––30 to 50 percent faster––and for substantially lower cost.

Some builders even embrace steel for residential construction. 

Advantages of steel construction

  • Economical, cost-efficient construction
  • Lower initial cash requirements than for alternative materials, such as tilt-wall concrete
  • High weight-to-strength ratio
  • Minimal waste
  • Shorter construction time
  • Steel buildings withstand high winds, earthquakes, heavy snow loads and driving rainstorms
  • Steel can be molded into virtually any shape or stamped to mimic other materials

Prefabrication enhances all of these advantages, meaning that an investor can begin to see a return on investment dollars sooner. Spending fewer dollars equates to less financing cost and less time from project concept to completion. That translates to smart business practice. 

Cashing In on Ownership

Current emphasis on carbon-neutral buildings, energy-efficient operation, long-term sustainability and flexibility of use are additional reasons to look at steel buildings as part of your comprehensive real estate investment planning. A Canadian research-oriented effort has brought together architects, engineers and industry experts to explore the topic of how rigid-framed steel building systems can be used to produce carbon-neutral retail facilities.

Energy certification and the LEED rating systems of the Green Building Council also rank pre-engineered steel buildings near the top of the pack in terms of insulation, heating and cooling efficiency and consumer demand. Because these are sought-after benefits for lessees, owners are able to charge tenants premium rates. In addition, owners are often able to negotiate longer terms with prospective tenants.

Steel also has other advantages, some of them not quite as obvious. Because it is a recyclable material, it is a green choice. In North America, scrap steel is an essential element in making new steel. Every steel building is most likely is fabricated from at least a few recycled automobiles! 

Because steel buildings are meant to last, your warranties are likely to be for longer periods, and you may be eligible for energy-efficiency tax credits as well, putting actual dollars back in your pocket. Finally, steel buildings are adaptable; they are relatively easy to modify, both inside and out, to satisfy future tenants, expanding your future leasing options.

Ownership benefits of metal buildings

In a nutshell, your steel building is designed to:

  • Last longer than a building constructed of other materials
  • Require less upkeep
  • Cost you less at the outset and throughout its life 
  • Allow you to reconfigure interior space economically, as necessary
  • Carry lower insurance premiums
  • Appreciate faster and retain its value longer

For a lot of reasons, steel is a natural choice for the commercial investor.

Engineers and architects worldwide recognize steel's ability to be both artistic and versatile, in addition to its proven durability and cost-effectiveness. Whether used for a sprawling clear-span warehouse, a mini-storage facility with individually heated or cooled units, a sprawling retail complex, or an impressive high-rise building, steel is a modern material with a lot of possibility.

Structural steel is suitable for virtually any phase of the building process, from framing to roofing; floor joints and ceiling beams are both stronger and lighter than structural wood used for the same applications. Because nearly 80 percent of the steel used for building products is derived from recycled material, it is more sustainable than wood. Shipping costs are lower not only because of the weight, but also due to regional availability, and labor costs tend to be comparable or lower than the labor costs associated with other materials.

As a commercial real estate investor, look to the future and explore all the advantages of steel buildings. You'll be pleased at the effect on your bottom line.

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