Industrial land can appeal to businesses that want to build warehouses, factories or distribution centers. However, buying industrial property involves more than picking a location and agreeing on a price.
If you are considering an industrial site, several issues can affect both your budget and timeline. The condition of the property and the rules that apply to it can shape what you build and how long the project may take.
Conducting due diligence
Before you buy industrial land, you will likely need information about the property and your planned use of it. Important areas of review may include:
- Confirming that zoning rules allow your intended use
- Identifying environmental issues from prior uses of the site
- Determining whether roads and utilities can support your project
- Reviewing easements, deed restrictions and flood risks
- Examining title issues that could affect ownership rights
These issues can affect what the project costs and how long it takes. For example, a site that appears ready for development may still need cleanup work or utility improvements before construction can begin.
Regulatory approvals and development requirements
Buying industrial land does not automatically mean construction can start. Many projects need approval from local agencies before development can begin. Potential requirements may include:
- Obtaining land development approvals
- Securing subdivision approvals for projects with multiple parcels
- Receiving permits related to environmental concerns
- Meeting stormwater management requirements
- Completing traffic studies or infrastructure improvements
The approval process can add time and expense to a project. In some cases, neighboring property owners and community groups may also take part in public hearings about a proposed project.
Structuring terms and managing risk
Industrial land purchases usually involve large investments. The terms of the transaction can address environmental issues, financing terms and other risks tied to the property.
Some transactions include extra time to review the site or conditions tied to financing. Buyers also sometimes hold industrial property through business entities instead of in their individual names. These decisions can affect both the purchase and the future use of the property.
Looking beyond the purchase price
The purchase price is only one part of the investment. Development costs, approval requirements and site conditions can all affect how quickly a project can begin.
For that reason, buying industrial land involves more than looking at location and price. The information you gather before closing can reveal both the benefits and the challenges of a site.