ATLANTA—Whether it is on the front-end funding of a build-to-suit e-commerce development or on the back-end purchase of a completed and fully-leased facility, the institutional investor must analyze several factors. That's according to the organizers of NAIOP's E.CON '15: The E-Commerce Conference.

GlobeSt.com caught up with Chris Riley, vice chairman at CBRE, who's moderating The Investor's Guide to the E-Commerce Galaxy at the event. In part two of this exclusive interview, Riley talks about capital requirements necessary to re-purpose vacant industrial facilities and more. You can still read part one of this interview:

GlobeSt.com: What are the potential capital requirements needed to re-purpose the facility if vacant, and what are the tenant's obligations regarding the condition of the premises upon lease expiration?

Riley: Each building is different, but removing the mezzanine can approach $5 per square foot. The balance of the improvements are typically useable for future tenants.

GlobeSt.com: How are industrial investors responding to this changing landscape, one in which e-commerce is making such an impact?

Riley: This is an interesting time for investors as they are trying to determine the sustainability of the e-commerce designed buildings. Essentially, they need the tenant to occupy the building longer than the primary lease term for the investment to achieve the desired return.

Second, investors want to ensure that the features and cost basis will be competitive and leaseable if or when the original tenant vacates. Since these e-commerce buildings represent the most significant change in the last 25 years, this is a pioneering time with very little historical performance to depend upon. 

GlobeSt.com: How does the dollar investment made today, relative to the current rental rate, correlate to the future rental rate?

Riley: The rental rates for e-commerce buildings are typically 25% and higher than conventional bulk buildings. If the design features are necessary for a future tenant, then the more expensive rent will be sustained. If not, the building will experience a significant roll back in rate and value.