Tuesday, April 19, 2011

Buying Industrial Real Estate Tips

How far in advance should you start looking for space?

To Lease - 4 months in advance of your current lease expiration - 1st month to educate yourself on the market. 2nd month to identify and narrow down your choices. 3rd month to get the lease negotiated and signed. 4th month to overlap your last month of existing lease and allow a smooth orderly transition from your old space to the new space. You can adjust the lead time if you have complications such as an equipment intensive manufacturing company requiring HVAC and electrical modifications - or other tenant improvements which require permitting and construction

To Purchase - 6 months in advance of lease expiration- 1st month- to educate yourself on market value. 2nd & 3rd month to scour the market and identify several options - 4th month to negotiate and get under contract- 5th & 6th months to do your due diligence, arrange and finalize financing - and close on the property. If you are hard to satisfy you may want to add another month or even two. You can adjust the lead time if your requirements are not typical of conventional construction and need unique or special features difficult to find (ie. no interior columns, 35' ceilings).

Identify the zoning you need and define your geographic boundaries.

Each municipality has a zoning ordinance which specifies which businesses can operate in differently zoned areas. You can go to the link shown at the end of this article to determine which zoning you need. MuniCode provides online ordinance presence for numerous municipalities. It is critical that you first identify where your business can legally operate and then limit your search those areas. If you don't do this it will be a very expensive and time consuming mistake. I can't emphasize this enough.

You need to identify where you want to locate. Over my professional career as an industrial specialist I have found that given all things equal, the final space location is strongly influenced by the proximity to the owner of the company's personal residence. Other factors to consider are: distance to major interstate highways, airports, shipping ports, rail service, labor force, public transportation and markets served. A good idea is to determine the furthest you will go in all directions. This helps make the search workable.

Determine whether you need loading docks

If you are a distributor you need loading docks. You may also need street level doors. If you are a manufacturer or service provider, you may not need loading docks. There are several types of loading docks. Truck wells, recessed, platforms, 30" docks and 48" docks. Make sure you select a building with the correct height docks, quantity and configuration. Don't forget the size (dimensions) of the overhead doors. It won't do you any good to have a 14' high truck that needs to drive into the building and only 12' high doors. You may also need a ramp. Consider how much time not having a needed feature will cost you in a time and motion study.

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