Leasing Or Buying A Food Processing Facility Overview
The e-commerce revolution is being driven by the food and beverage industry. As a result, food processing properties are in high demand across the United States because customers want faster delivery, more specialized products, and digital shopping experiences.
It is not easy to evaluate potential properties for a food processor business. However, it can be a challenging task.
Decide If You Retrofit Or Build New
The location of your business and the target submarket you are targeting will significantly impact your property search. It will impact whether you are able to retrofit an existing property, or build, buy, or occupy a property that is custom-designed for your business.
Retrofit
Los Angeles is an example of a highly competitive urban market. There may not be enough land to build your new facility. Developers compete aggressively for every site that is available in such areas. The land price can make it prohibitive to build on, even if there is some land available. It is more practical to retrofit an existing facility in these cases.
You will need to evaluate a number of elements if you decide to retrofit an existing food processing facility. These include the wash-down walls, the temperature and height of the cooler and freezer systems, the location and size of floor drains, the volume and type clarifier, the separation system that handles wastewater, and the quantity, pressure, and pipe size for the incoming water supply.
You must consider both the existing infrastructure and the infrastructure elements that need to be removed or demolished when retrofitting or renovating a building. Each existing system within the building will need to be removed, sold, or scrapped. Some equipment is attached to the warehouse foundation via footers or thick concrete pads. The same applies to mezzanines. This makes the removal of these items costly and labor-intensive. It could be advantageous to negotiate the removal of equipment from the warehouse foundation by the owner before signing the lease/purchase contract.
When To Build New
Companies that are located in rural, secondary, and tertiary markets find that there is land available that they can build their facilities on. These markets offer excellent opportunities for companies to build to suit, i.e., a property that is specifically built for your company and its needs.
There are three options when it comes to building a new plant:
Be the first to build a new property.
Purchase an unfinished building from a builder and then customize it to meet your needs.
Hire a general contractor to build your property from scratch.
This first approach allows you to identify properties in their first-generation and then customize them to suit your needs. This option is the fastest because you don't have to wait for entitlements.
The second option allows you to work with a developer that has already purchased the land. They will design and build your property according to your specifications, starting at the site level and continuing up to the building envelope. This is the best option for companies who have the time and the budget to build a facility to their exact specifications.
The third option is to buy the land from yourself. You might be able to negotiate economic incentives with the local municipality to lower your tax liability and ease land acquisition approvals. Although it's the most cost-effective option in many secondary markets, hiring a general contractor to buy land is also the most time-intensive.
Trusted Advisors
Contractors and industrial engineers can be extremely helpful in the search for a food processing facility. They have the experience to accurately evaluate the cost of retrofitting an existing plant or building a new one.
Take A Look At The Production Process
It is crucial to understand the requirements of the industrial property you are looking for to house a food production facility. For example, some manufacturers only mix and package dry ingredients, while others work with liquids or raw materials that must be stored, heated, and cooled in certain ways.
Every aspect of food manufacturing is associated with unique property characteristics that can impact your property search. Warehouse clearance is a key criterion if the machinery used in food production is more than 16 feet high. If your food production requires a freezer or cooler space, you will want to carefully examine the current amps serving the property.
Search Properties With Existing Certification
Food processing has become more controlled, and large grocers now demand transparency in the food supply chain. As a result, some existing food processing plants have been certified by the USDA and FDA. This can help to reduce the time from lease signing or closing to construction, regulatory board approval, and opening the plant.
Carefully And Clearly Negotiate FF&E
It is crucial to clarify what items are included in a food processing plant lease or purchase. For example, many sellers and landlords will consider furniture and fixtures as bonuses features and charge an additional fee in addition to the property's purchase price or rental rate.
It can be a fascinating experience to learn how to purchase or lease a food processing plant. This is a chance to work with developers and learn more about building, analyze transportation, labor, and economic incentives, and collaborate with top-level experts in the field. These aspects will help you get closer to your goal of opening your ideal food business.
