Source: Colorado Biz, Glen Weinberg

There are many studies that say height correlates with success and therefore earnings potential. Is this actually true for success in real estate? Does being taller actually help make more money than your peers? Unfortunately, the answer is a resounding “Yes!” Not being tall enough can be the ultimate deal killer in many circumstances.

Fortunately, I’m not focusing on your personal height but on the height of your real estate. Does your ceiling height make that big of a difference in the value (either sales or lease rate) of the property? Does a ceiling height matter only for certain types of properties? Can ceiling height (or lack thereof) influence a company’s bottom line?

When one thinks of ceiling height, the first property type that comes to mind is an industrial building. Many of the older industrial buildings had ceilings heights less than 16 feet. Unfortunately, this is less than ideal for today’s users. Why? In the past, a number of buildings in Denver were used for light assembly/ manufacturing, for example, a commercial printer. These uses did not require higher ceilings.

Today’s uses are radically different. Many are used by service professionals (for example a commercial HVAC company) that needs storage for various parts, trucks, etc… or a distribution company that moves goods or repackages goods for various end-users (cross-dock operation). The new uses require a minimum of 28 feet of clear height for many tenants. It is cheaper for users to stack up as opposed to building a larger building. As a result, many of the older industrial buildings are now functionally obsolete.

Although ceiling height is a large concern on industrial buildings, many retailers are also now requiring a minimum of 16-feet clear height in their properties. A well-known California architect (David Baker) recently noted: “Low ceilings make uninviting spaces that rent for less, feel cramped, are less visible from the street, and don’t allow commercial uses to easily flourish. For just these reasons, in new suburban malls and shopping centers, retailers consider ceiling heights of 16 to 24 feet essential to the success of the stores. And that is exactly what they build.”

Furthermore, this trend is expanding into the office sector as well. A study was done by the University of Minnesota which came to the conclusion that people in an 8-foot-high ceiling room feel more confined as opposed to being in a larger 10-foot-high ceiling room.

“Even though you’re not using the vertical height, it activates a sense of freedom,” says the study by author Joan Meyers-Levy. The Journal of Psychology also points out that “the lower the ceiling height of a ceiling, the more personal space we need from others.”

Unfortunately, your height does matter in real estate. The building ceiling height in many cases is no longer a nice to have amenity; for many tenants, it is now a requirement. The higher ceilings allow higher rents which ultimately increases the building’s value. So the old adage that height brings success/wealth is alive and well in real estate.

Glen Weinberg is an owner and the chief operating officer of Fairview Commercial Lending, a privately funded hard money lender based in Evergreen. Fairview has been lending since 1975 He is recognized throughout the industry as a leader in hard money/non-traditional real estate financing on both residential and commercial transactions throughout Colorado. More information can be found at www.fairviewlending.com