Trying to save a music rehearsal colony. Build vs buy.
Posted: Sat Dec 29, 2018 3:42 pm
Mods: Please move or delete if I'm barking up the wrong tree here. Apologies in advance.
TL;DR We own a rehearsal studio business but not the building. Getting kicked out of our building in 3-5 months. How do we proceed? What would you do?
----
Not long ago, I posted this piece on reddit.
https://bit.ly/2BJWJxL
I wanted to elaborate a little bit on the exact situation and get some 'real talk' answers from the musical hive mind, from people that may have been in a similar situation.
Long story short, we bought rehearsal studio 'business' in Denver, that includes a very large asset list, a rolodex, a ramp-up period, and a sterling reputation. Not only have they hosted local, regional, and global acts, but they also provide services to the community, such as lessons, rock 'camps' for kids, creative outlets for the disabled, and more. 20 bands have monthly rentals there, and it's an awesome collective to be a part of. The previous owner of the business has ran it successfully for almost two decades and is looking to retire.
I've been in and out of the music scene for the past 20 years, and finally decided that this was a time to truly take a risk and follow my heart, get out of the mediocrity of 9-5 life, etc etc I feel like I'm preaching to the choir here... but you get the idea.
The building was sold to another party, and we are trying to decide what to do from here. The new buyers have aspirations to gut the building for new purposes. We have 3-5 months maybe to figure out our plan. We had the opportunity to buy the building that currently houses it but missed out for a number of reasons. I can't change the past, nor will I let it define me. So we are where we are, now...
The building the business currently occupies is 8000 sf and had roughly $300k of tenant improvement done to it in two phases in order create 20 separate monthly rehearsal spaces, and 3 hourly/daily rehearsal spaces. Multiple layers of sheetrock, not a single right angle in any space, suspended ceilings, and air gaps and insulation between two sets of walls that separate each space. And that was $300k in improvements a couple decades ago, so I assume the cost to reconstruct the same thing has risen since then.
Bass still travels in the building a fair amount due to the floor, and there's zero ability to build anything out any further. The building isn't perfect, but it is turn-key and can immediately start generating income.
Immediately after the building was sold, we reached out to the new buyers and asked them what it would take for them to simply flip us the property. Didn't hear anything for a couple weeks. We began looking for a new building and contractors.
Here's how the wall and ceiling layers are currently constructed in existing building:
2 layers Sheetrock 3 / 8 outside
Studded wall
R19 insulation
Air gap
Studded wall
More R19
3 layers Sheetrock inside
Steel doors outside wood doors inside
Air gap between walls is from 1 ft to 4 inches depending on point in angle
Ceilings are suspended individually in each room and use a glue adhesive against the walls of each room to help reduce vibration.
Floors are concrete; no enhancement or additional padding there.
We have had quotes all over the map as to what it would take to re-create those walls/ceilings in an empty box...from $25-50 / sf for materials alone to $250 / sf for a full staffed buildout. The buildings themselves aren't cheap either. New tariffs alone made the materials costs rise about 20%, and the commercial real estate market in our area is hot thanks to rec weed. It's a real moving target on what it would truly take to recreate this building. To add to this, I am not handy with anything that's not a board, rack, stack, or an XLR snake. This forum gives me a ton of inspiration that, perhaps, I COULD do a lot of this myself, but I'm unproven at the moment...
Today we heard back from someone representing the new owners. They want a 40% premium on their buying price, "to start the discussion." My response back to the representative was offering to fly to the headquarters of the new out-of-state building owner, rather than just their representative, and negotiate my heart out. They want to create a new business in our area using their newly-purchased building, but I would much rather see two businesses flourish (mine and his) than see the one I really care about die. There has to be a middle ground somewhere.
But as I was responding, my heart sank; I know it's a hail mary. Basically this situation is saying that, in order to continue this path, we would have to pay hundreds of thousands of dollars more than anticipated to get the same building, and even then, nothing would be guaranteed. That spread of 40% is the equivalent of 5 years of profits and salary. It's painful to think about.
As an alternative, if we find the 'right' building, and phase in construction the 'right' way, we could put those hundreds of thousands of dollars to better use...somehow. Or, I could just be kidding myself and end up paying an 80% premium buying another building and doing a build out that will inevitably take twice as long and cost twice as much as I would estimate it to be...?
What would you do in this situation? Would you eat your pride and go after the original building, knowing you're paying waaaay over what you could have originally? Would you keep fighting the good fight to find that Goldilocks new building? Would you find a space to lease instead, and not build any equity, and possibly have nothing to show for it in the end? Are there pre-fab buildings / walls / spaces I should be looking at?
Let me end by saying that, I know there are no easy roads here. I just want some insight from someone that might have been in a similar situation or have been an entrepreneur in the past and have seen this decision framework come up. I'm not expecting easy street. I just want to know which hard road we should be taking. Any insight or words of wisdom are greatly appreciated.
You're helping someone achieve their dreams, save a music community, and help the future owner not go broke in the process. And for that I thank you.
TL;DR We own a rehearsal studio business but not the building. Getting kicked out of our building in 3-5 months. How do we proceed? What would you do?

----
Not long ago, I posted this piece on reddit.
https://bit.ly/2BJWJxL
I wanted to elaborate a little bit on the exact situation and get some 'real talk' answers from the musical hive mind, from people that may have been in a similar situation.
Long story short, we bought rehearsal studio 'business' in Denver, that includes a very large asset list, a rolodex, a ramp-up period, and a sterling reputation. Not only have they hosted local, regional, and global acts, but they also provide services to the community, such as lessons, rock 'camps' for kids, creative outlets for the disabled, and more. 20 bands have monthly rentals there, and it's an awesome collective to be a part of. The previous owner of the business has ran it successfully for almost two decades and is looking to retire.
I've been in and out of the music scene for the past 20 years, and finally decided that this was a time to truly take a risk and follow my heart, get out of the mediocrity of 9-5 life, etc etc I feel like I'm preaching to the choir here... but you get the idea.
The building was sold to another party, and we are trying to decide what to do from here. The new buyers have aspirations to gut the building for new purposes. We have 3-5 months maybe to figure out our plan. We had the opportunity to buy the building that currently houses it but missed out for a number of reasons. I can't change the past, nor will I let it define me. So we are where we are, now...
The building the business currently occupies is 8000 sf and had roughly $300k of tenant improvement done to it in two phases in order create 20 separate monthly rehearsal spaces, and 3 hourly/daily rehearsal spaces. Multiple layers of sheetrock, not a single right angle in any space, suspended ceilings, and air gaps and insulation between two sets of walls that separate each space. And that was $300k in improvements a couple decades ago, so I assume the cost to reconstruct the same thing has risen since then.
Bass still travels in the building a fair amount due to the floor, and there's zero ability to build anything out any further. The building isn't perfect, but it is turn-key and can immediately start generating income.
Immediately after the building was sold, we reached out to the new buyers and asked them what it would take for them to simply flip us the property. Didn't hear anything for a couple weeks. We began looking for a new building and contractors.
Here's how the wall and ceiling layers are currently constructed in existing building:
2 layers Sheetrock 3 / 8 outside
Studded wall
R19 insulation
Air gap
Studded wall
More R19
3 layers Sheetrock inside
Steel doors outside wood doors inside
Air gap between walls is from 1 ft to 4 inches depending on point in angle
Ceilings are suspended individually in each room and use a glue adhesive against the walls of each room to help reduce vibration.
Floors are concrete; no enhancement or additional padding there.
We have had quotes all over the map as to what it would take to re-create those walls/ceilings in an empty box...from $25-50 / sf for materials alone to $250 / sf for a full staffed buildout. The buildings themselves aren't cheap either. New tariffs alone made the materials costs rise about 20%, and the commercial real estate market in our area is hot thanks to rec weed. It's a real moving target on what it would truly take to recreate this building. To add to this, I am not handy with anything that's not a board, rack, stack, or an XLR snake. This forum gives me a ton of inspiration that, perhaps, I COULD do a lot of this myself, but I'm unproven at the moment...
Today we heard back from someone representing the new owners. They want a 40% premium on their buying price, "to start the discussion." My response back to the representative was offering to fly to the headquarters of the new out-of-state building owner, rather than just their representative, and negotiate my heart out. They want to create a new business in our area using their newly-purchased building, but I would much rather see two businesses flourish (mine and his) than see the one I really care about die. There has to be a middle ground somewhere.
But as I was responding, my heart sank; I know it's a hail mary. Basically this situation is saying that, in order to continue this path, we would have to pay hundreds of thousands of dollars more than anticipated to get the same building, and even then, nothing would be guaranteed. That spread of 40% is the equivalent of 5 years of profits and salary. It's painful to think about.
As an alternative, if we find the 'right' building, and phase in construction the 'right' way, we could put those hundreds of thousands of dollars to better use...somehow. Or, I could just be kidding myself and end up paying an 80% premium buying another building and doing a build out that will inevitably take twice as long and cost twice as much as I would estimate it to be...?
What would you do in this situation? Would you eat your pride and go after the original building, knowing you're paying waaaay over what you could have originally? Would you keep fighting the good fight to find that Goldilocks new building? Would you find a space to lease instead, and not build any equity, and possibly have nothing to show for it in the end? Are there pre-fab buildings / walls / spaces I should be looking at?
Let me end by saying that, I know there are no easy roads here. I just want some insight from someone that might have been in a similar situation or have been an entrepreneur in the past and have seen this decision framework come up. I'm not expecting easy street. I just want to know which hard road we should be taking. Any insight or words of wisdom are greatly appreciated.
You're helping someone achieve their dreams, save a music community, and help the future owner not go broke in the process. And for that I thank you.