Right, but there is no question that you have greater risk with private utilities than you do city utilities. That risk may look a lot less appealing on a 30 space park than a 130 space park, as you have less number of pads to “rationalize” the cost. For example, let’s say that the cost to replace the packaging plant is $200,000. On a 30 space park, that’s almost $7,000 per space – a huge percent of value. However, on a 130 space park, that’s only around $1,500 per space – a much more attractive number. Due diligence is key, to see what the useful life of the item is and what it will cost to replace.
Of course, no matter what the utility construction, it’s really all about the numbers and terms. At a 20% cap rate and 0% down, probably anything looks attractive. And at a 6% cap rate and all-cash, nothing looks very attractive.