HOW
CAN WE HELP YOU? :: Industrial
WHAT YOU SHOULD CONSIDER WHEN BUYING PROPERTY FOR INDUSTRIAL USE
See the Current List of Industrial
Buildings For Sale in Medina County, Ohio
1. Size and layout of the offices and work areas.
TIPS: Generally you should allocate 100-150 SF per office employee. Work areas’ ceiling heights will impact use whether it is sufficient for equipment use or stacking of inventory. Generally you will need 6’ of height for every level of storage racking needed. If you were going to go with 3 levels of storage racking you would need 18’ of clear height. The higher you can stack, the less square footage you will need to lease or purchase.
2. Lease vs. Purchase.
TIPS: With commercial real estate there is no clear advantage of doing one over the other. It becomes a question of which is the best use of your capital and what alternatives you have for investing and at what rate of return. There are tax advantages to both the purchase and the lease. You need to discuss you objectives with a professional.
3. Zoning and verifying uses permitted.
TIPS: Vacant land is where the risk is the highest for errors in zoning. In addition to “use” (for what purpose(s) may the property be used) questions the buyer will need to be aware of rear and sideline setbacks, frontage requirements, width at the building line, parking density, noise, and lighting limitations, sign restrictions, building size limitations, etc. In addition to governmental requirements you will also need to determine if there are deed restrictions or restrictive deed covenants or property association rules that will impact your intended use. Zoning regulations are not consistent from one jurisdiction to another even though they may have the same headings. Home Rule in Ohio allows each jurisdiction to form there own rules and definitions for each use.
Existing buildings have fewer zoning issues. If actively in use the building will generally be “grand-fathered” for most zoning issues. However, if abandoned or unoccupied for a long time (generally 2 years or more) they lose their grand-fathered protection. Many communities now also require “Occupancy Permits” which come about when there is a change in tenants. This triggers an inspection for building and fire code violations. You may not be able to occupy until the inspection has been completed and the violations corrected.
Building Codes are more standardized than zoning, but the local governing authority may add requirements to the State mandated codes.
4. Tax incentives for industry.
TIPS: These incentives are generally limited to new construction or remodeling of the structure in excess of $25,000 of capital improvements. Equipment is no longer abated for tax purposes. These incentives are not universally available. Generally they are available in “Community Reinvestment Areas” and they will vary with the dates they were implemented. The older the CRA area is the more likely its terms will offer greater abatement. Generally the abatement will be for 10-15 years and from 100% to 10%. They must be applied for prior to the buyer committing to purchase as they are to incentivize the prospect to purchase in a certain jurisdiction.
There are other tax based incentives such as TIFs which stands for Tax Incremental Financing. Generally this is for public use structures like parking garages.
Foreign Trade Zones are another tax based incentive. This generally affords relief from import fees, duties and taxes and is limited to certain pre-approved industrial districts. There are four areas in Medina County that have applied to receive this special status.
5. Building new vs. existing construction.
TIPS: With a few exceptions in today’s market it is more expensive to build than to buy an existing structure. With building costs going up every day and fewer and fewer choice land options left it is better to explore the existing market first. Land prices increase as the size of the parcel decreases. This is because most existing road frontage has already been developed. So development must occur before additional parcels become available and the cost to develop must be passed along to the buyer. The buyer will find that the cost of the new street, sewer, water and energy sources are wrapped in to the sale price. Since the highest demand is for smaller lots the pricing is set accordingly.
Generally you will pay a premium to develop and build anything under 10,000 SF. There are few, if any, efficiencies in building units of this size or smaller. You will probably find better values in buying a industrial condominium unit than attempting to build new construction under 10,000 SF.
6. Location
TIPS: The most important aspect of purchasing or leasing real estate is still location. You will need to determine what is more important access, visibility or lower cost. Industrial buyers often do not need visibility but may still pay a premium for a location with good transportation access. You only pay for location once. You will continually pay for lack of access in your transportation costs, employee and customer convenience, etc. You need to first plot out your locational relationships to customers, suppliers and employees and then evaluate the each location accordingly. Utility access also plays a role in location. The property may be cheap because it does not benefit from having access to sewer, water or other utilities essential to your business. Access to telecommunications is becoming increasingly important. Can you get broad band access?
7. Environmental issues.
TIPS: You can no longer afford to buy property without having an environmental inspection. The liability for clean up is too great. Don’t forget that wetlands, floodplains and retention or detention basins are a part of every land purchase. Finding wetlands or flood plain may mean the property is unusable for you purposes. Mitigation is generally very expensive. There are alternatives to consider when considering property with this type of issue. Working with the wetland in designing your site plan may enable you to use a otherwise very attractive site. You just need to know the lay of the land prior to making the commitment.
Make a phase I environmental inspection a part of any purchase. Your
lender will probably require it for loan approval. Please note that
such matters as wetland, asbestos, radon and lead paint are not
part of the standard Phase I. You must request these separate inspections
or they will not get done.
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