Siting a new facility

Variances are typically tailored narrowly, and may not permit you much flexibility in how you are using the property, so the nature of the variance should be considered carefully, to make sure it meets your company’s long-term needs. In the alternative, you may wish to work with the appropriate authority to change the zoning designation altogether. In either case, these activities should be completed early in the due diligence phase, since they can make or break a location’s feasibility. It is also highly advisable that you finalize any required variance or change in zoning designation before competing the purchase of a property.

Should we buy, rent or build-to-suit?

Another important factor in the search for a new location should be an analysis of whether your needs are best suited by purchasing property, leasing property or having a facility built-to-suit. A long-term ground lease (i.e. 30 years or more) with the ability to build and own the improvements located on the property, may decrease your initial capital investment into the land, while still satisfying your business needs. In the build-to-suit scenario, the property owner agrees to finance and construct improvements to fit your needs in exchange for a long-term lease on the property.

This option decreases your initial capital outlay even more, but the negotiation and documentation of such an arrangement is more complex at the front end, requiring additional legal costs and risk considerations. Finally, the outright purchase of property may be the preferred option if your goal is long-term ownership, or if property depreciation is an important factor in your business finances.

The questions, considerations and decisions associated with siting a new location are many. Accordingly, it critical for a business to seek the advice and assistance of experienced professionals when making the decisions and negotiating the various arrangements that surround the site selection process. Land planners, attorneys with proven industry-specific experience, and real estate professionals can add value at every step of the process. By considering the questions and issues set forth above early on, and engaging the correct persons within and outside of your company to participate in the process of identifying a new site, you can ensure that the location selected is one that will serve your company’s needs for many years to come.