Finding Commercial Building Sites

Choosing a new commercial construction site is a critical decision that requires careful consideration of various factors to ensure the project’s long-term success. This process covers the full spectrum of due diligence that requires real estate comps, feasibility studies, pro-forma, cost spreadsheets, income and cost studies, etc. There are other criteria that should be considered. In many of today’s markets, pad sites and locations for specific size and uses are difficult to find and may take a creative strategy to find a site that will work. The following are some additional key criteria to consider when selecting a new site:

1. Location and Demographic

Proximity to Customers/Clients: The site should be accessible to your target audience and ideally located near key market areas.
Target Market: Understand the demographics of the area, including income levels, population density, age groups, and lifestyle preferences. This will help you assess whether the location is suitable for your customer base.
Access to Major Roads and Highways: Good transportation links can ensure ease of access for customers, suppliers, and employees.
Visibility: A high-visibility location can help attract foot traffic and promote brand awareness.
Business Community: Being close to similar businesses or a growing industry hub can enhance networking, partnerships, and customer attraction.
Crime Rate: Research the crime rate in the area to ensure a safe environment for employees and customers.
Safety Infrastructure: Ensure the site is in a safe location, with adequate security features and emergency services nearby.
There are sources that can provide this information and 3F30 can assist in this process.

2. Competition and Market Demand

Proximity to Competitors: Be mindful of nearby competitors and how this might affect your business. In some cases, clustering with competitors can be beneficial, while in others, being too close might reduce your market share.
Market Demand: Evaluate the demand for commercial spaces in the area to ensure that your business can thrive in the chosen location.

3. Zoning and Land Use Regulations

Zoning Compliance: Ensure that the property is zoned appropriately for commercial use and that the local regulations support your type of business (e.g., retail, office, manufacturing). In many instances, the zoning is not a match, however, it is not uncommon to apply for a rezoning process. 3F30 has years of experience working with planning departments to achieve the appropriate zoning.
Permitting: Check the local requirements for permits, building codes, and environmental impact assessments that could affect the development. Be careful to check ALL possible permits required for need and cost. Remember to ask about impact fees, ROW fees, Utility fees.

4. Site Size and Shape

Adequate Land Size: Ensure the site is large enough to accommodate the planned construction, parking spaces, outdoor areas, and future expansion if needed. 3F30 provides simple site layouts to clients early in the process to provide valuable information in the decision process.
Shape and Topography: The site’s shape and terrain should be suitable for the design of the building, parking areas, and other infrastructure. Consider accessibility for vehicles and pedestrians.
ROW dedications: Be careful of required dedications that reduce the site size and possibly change the site efficiency.

5. Infrastructure and Utilities

Availability of Utilities: The site should have access to essential utilities, such as water, electricity, gas, sewage, and high-speed internet.

Sufficient Infrastructure: Nearby infrastructure such as roads, drainage systems, and telecommunications will reduce the costs and complexity of development. Road improvements may be a requirement of the development (either a condition of the development process, or as a necessary improvement for the project to succeed financially). Road closure permits, traffic control, while seldom a deal killer, may be added expenses.

6. Cost and Budget Considerations

Land Acquisition Cost: The purchase cost should fit within the project budget and align with expected revenue or investment return. 3F30 can assist in in this endeavor. This is normally a straight forward financed or cash purchase from a seller, but can be more complex or creative.

Site Development Costs: Consider any additional costs associated with preparing the site, such as clearing, grading, environmental remediation, and utility installation. Retaining walls? Dirt addition or removal? Road extension? 3F30 can assist you in this endeavor.

7. Environmental Factors

Soil and Ground Conditions: Assess the site for soil quality, contamination, and potential flooding risks. This generally requires a Geotechnical Report, however the seller may have an existing one that could be referenced.

Environmental Impact: Evaluate the environmental implications of the project and whether any mitigation efforts are needed. Normally green sites (never been used) are not an issue. Brown sites (sites that have a history of use) will be more likely to need formal documents, but not necessarily. The government entity will have a say in this process, but the financing company may also have their own requirements.

Climate and Weather: Consider the regional climate (e.g., areas prone to natural disasters) and how this will impact construction, long-term building maintenance, and operations. This is normally a general consideration, however some states, for example Florida, have their own building codes and standards. These areas can vary within an area of the state, particularly when you get closer coasts.

Flood zone classification: This is normally easy to confirm and should be done early in the process. Some flood zone classifications may be encountered that are not going to be a problem with development if handled correctly. However, there are some classifications that will likely kill the project or need some engineering and formal application process.

8. Accessibility and Parking

Public Transportation: Accessibility by public transportation can be crucial for employees and customers who do not own cars, but this varies from project to project. It also can be an advantage or benefit that is planned in the future.

Parking Availability: Ensure that there is enough parking for customers, employees, and delivery vehicles. Normally, designers work from the local government requirements, but 3F30 requires the client to be involved in the discussion of the overall parking required to have a successful business operation. Some local governments require extra space for unloading and larger trucks to be out of the traffic flow.

9. Future Growth and Development

Area Development Plans: Look into future development plans for the area. Upcoming projects, such as infrastructure improvements or new commercial developments, can enhance the site’s potential.

Land Appreciation: Consider whether the land value will appreciate over time, adding potential value to your investment.

10. Regulatory and Government Incentives

Incentives: Some regions offer tax breaks, subsidies, or incentives for businesses that are set up in certain areas. Investigate available incentives that could reduce initial costs. This could be local, but also from the state. There may be possible grants available, but these are generally small to the scale of the project. Beware that incentives also generally carry other development requirements and may extend the planning process calendar.

Government Policies: Be aware of any current or future regulations that may impact the construction or operation of the building, such as environmental policies or zoning changes. We have experienced projects that did not trigger in time to avoid zoning and ordinances that killed the project.

Local Taxes: consider the operating taxes that will affect your project. Sales tax is normally passed on to the customer, but there are other taxes that may be site, district, or special.

11. Other considerations

Labor Availability: Check if the area has a skilled labor force for construction, as well as for long-term operations (e.g., employees, managers).

Material and Supplier Access: Ensure that the site is well-positioned to access materials, suppliers, and subcontractors at reasonable costs.

Energy Efficiency: Consider sustainability features like energy efficiency, renewable energy sources, and eco-friendly building materials.

Resilience to Climate Change: Evaluate the site’s resilience against climate change risks such as extreme weather, flooding, and sea-level rise.

Community Relations: Understand how your business will fit into the local community and whether there are any potential social concerns or opposition to your development.

Employee Well-being: Consider the quality of life for your employees, including factors like nearby housing, schools, and recreational opportunities.

12. Outside the Box Solutions

Be the developer: Understand how your business will fit into the lot size, but also be willing to enlarge the process and lot split a larger property. This may allow you to find a property that works for your original generic program and also allow for more creative placement on the site. The remainder of the property would then be marketed for sale at a time that is appropriate to the development process. The alternative process is to buy a larger property that still fits in the budget and just landbank the leftover property. In other words, do not search for the property maximum size, but the location and end cost.

Utilities and road access: Set up for more than just your portion of the larger property. By extending your site utilities you can make the adjacent land more ready to develop and more valuable to sell.

Subdivide: Confirmation is required from the local municipality for the process and ability. You could subdivide only the portion of the property you need and leave the rest for future real estate activity or create multiple pad sites in your process.

Reuse: There is always the option of converting an existing building into a building meeting your needs. This is particularly important to consider if the site is very good. But the options of raze and rebuild (tear down old and build the new) and creative additions to existing buildings often become the best option. When razing the old structure remember to budget for the demolition and site work, but you also may realize some savings in utility taps and existing services.

Final Considerations for Selecting Commercial Building Sites

By evaluating these criteria carefully, you can select a commercial construction site that not only meets your current business needs but also positions your project for long-term success. 3F30 Architects can assist you in all levels of this analysis process including comparing multiple sites. Bryan Ruoff, President of 3F30, is both a licensed Architect and Realtor with over 30 years of commercial experience.