The nature of commercial and industrial property industry says that each industrial property must satisfy a number of attributes for each occupant relative to the way it transacts it’s business both today and into the future. This is where you are the ‘detective’ to source out the real issues behind the property need and then seek to solve the ‘property mystery’ with available or identifiable stock.
If you can find a satisfactory parcel of land, then you can work with a developer to see if a suitable building can be constructed on the property to satisfy the needs of the industrial business and occupant. The building can be later sold on as a functional investment with a secure lease. You can also assist with the lease structure and implementation.
So there are some clear levels of new property business to be considered here and you are the ‘catalyst’ to make things happen.
The Identified Industrial Property Development Need
Property developers usually act only from an identified property need. They can also pioneer a new site or speculate to a new multi-occupant location as circumstances allow and the property market demands.
It is however far more common for the developer to build something that is an established need with identified parties. This is where you can be a catalyst for creating new deals and then add value to the task.
If you choose to work with developers to find sites that are suitable for new development and established parties, be selective as to who you work with and how you get paid for your time and your transactions. This development process has the advantage of allowing the buildings to be constructed and specified to the terms of the end-user occupants as well as the investor owner.
After the building is constructed you can potentially on-sell the site from the developer to a longer-term investor. Multiple commissions evolve from different stages of the transaction as it then moves ahead through site acquisition, purchase, construction, leasing, and later disposal. Does this sound interesting? Can you take your position as a property strategist in the local market?
The Industrial Business Occupant and Their Needs
Every tenant or purchaser for industrial property is unique and special. It is a matter of locating the appropriate site that satisfies the needs of the industrial construction for the end-user.
So let’s presume that you have the tenant or a purchaser for an industrial site that is to be the subject of new development. The building that is to be constructed must be functional and practical for the chosen business. You simply need to find the right land with the right circumstances of occupancy.
There are a number of key issues that should be considered relative to the future site and occupant when you assess the land and its general suitability for the development. Let’s look at some of these things.
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Checklist for Site Assessment
You can form your ‘checklist’ from this example and then modify it as the market, the client, and precinct require.
- The amount of space available: This analysis applies to the size of the land and the potential building that can be constructed thereon. Physical aspects of the site will impact on the location of the constructed improvements. You will also need to review the fall or levels of the land so that it does not unduly slope in any direction which will frustrate the property usage. Industrial occupants like flat land or something that has a slope of less than 5%. The site will need to be levelled off and stabilised for construction and vehicle movement. If you need a larger property for your client then you would need to look at the consolidation of a number of adjacent properties. This consolidation will require contemporaneous contracts so that they link to the end result that you require. Beware of the timing aspect of the consolidation of multiple sites so that any and all documentation allows for the extended time frames and approvals that are usually involved.
- The location of the property: Industrial property is only allowed in locations with appropriate zonings. Once you have located the available vacant land that is zoned for industrial applications and usage, you will need to match the location of that land to the requirements of the industrial occupant. Those requirements will allow for relationships to end markets, transport corridors, raw material suppliers, labour and employment availability, and transport staging points such as airports, seaports, and railheads. You need to know that the property location complies with the needs of the end occupant within these categories.
- The physical aspects of the property: These facts apply to the particular chosen parcel of vacant land. You will need to have detail on the size of the land, the regular dimensions of the land, the topography, and the soil conditions. These facts must all satisfy a critical cost and feasibility balance to correctly construct a new building of the size and type that the occupant requires.
- Existing Utilities and Services: All properties will have some ability or need to connect into existing services and utilities. With industrial property, the common needs are 3 phase power, water, gas, sewer, drainage, bitumen road and kerbing. If any of these are not available at the relative site, then you need to know how the connection or supply can be made and at what cost. It is likely that the local council will have comments and added costs that they will apply to new connections to an undeveloped parcel of vacant land.
- The physical condition of any fixed improvements: The identified site may already have existing improvements located thereon. This being the case, they should be assessed for functionality and relevance to the new occupant. Are the existing fixed improvements adaptable to the new occupant and can they bring any value to the property? Will they complement or restrict new occupation needs?
- The location and approval of any new fixed improvements: The local council regulations may control the construction and location of new improvements on the property. The best way to handle this is to have a preliminary meeting with the council planning officers to discuss and identify any impositions or requirements of new construction on the site. It will be necessary for building and development applications to be lodged in accordance with the planning regulations in your area. All of this takes time and should be well considered for the impact that it can have on your project.
- Site improvement requirements: A new property construction will feature a number of construction strategies and improvement placements. These will typically be warehouse requirements and placement, office requirements and placement, car park requirements and placement, goods and materials storage, landscaping, vehicle movement, the security of the site, and environmental integration and protection. It is best to review these matters with the future property occupant to get a clear indication of the way that these things must work for the success of the business. There will be a balanced flow between these separate parts of the property which makes the property efficient and successful for the occupant.
- Legalities: Every property will be impacted by the essential legal elements of occupation and construction. These will commonly be the construction approvals, development approvals, established ownership title, the impact of any encumbrances on the site, property zoning, the current building codes, any necessary contract documentation, any necessary lease documentation, construction agreements, finance, heritage matters, and environmental impact statements. Given that these matters are complex and specialized, is wise to involve the assistance of property solicitors to assist you, the client, and the end-user of the property with appropriate and legal terms of an agreement.
So these are some of the main elements of the site analysis for a future industrial occupant. You can add to the list given the market and property type that you are handling.