The development of new industrial buildings on what is known as greenfield land (land that has never had any type of structure erected on it) is relatively straight forward to the extent that provided services and the proper zoning are in place and environmental studies and regulations are dealt with in a manner that is satisfactory to the governing bodies, one is free to construct a building provided that it is built to code and conforms to coverage allowances (the amount of allowable building area on a particular piece of land).
As the demand for developable land continues to out-pace supply across Canada’s major centres including Vancouver, Calgary, Edmonton, Toronto and Montreal, naturally causing increases in pricing, end-users and developers alike are forced to ask themselves the questions that ultimately lead to creative solutions. These questions are often found in the form of; “How am I going to get control/ownership of developable land at a reasonable price, located within the hubs of activity (namely airports and major cities), satisfy zoning requirements so that I can develop my required warehouse building in a time frame that is not too prohibitive based on the double digit return I expect on my capital”. The answer to what is clearly a complex question is more and more often found in the redevelopment of existing buildings located in urban centres throughout the country.
The redevelopment of existing industrial buildings and/or land sites upon which an industrial building once sat vs. Greenfield development is another undertaking entirely. A multitude of considerations and challenges are required to be examined and solved prior to engaging on redevelopment of these types of properties. Consider the following as examples:
The City’s Vision For Land
There is tremendous pressure on local Government within the major cities to rezone former employment lands (land that has been used to house commerce by way of retail, commercial or industrial) to residential in order to accommodate the ever-growing demand for housing within these urban areas. While cities do their best to maintain a palatable balance between the two for reasons varying from people needing a place to work that is within reasonable travel distance utilizing public transit, thereby eliminating the need for automobile reliance, to ensuring that the higher tax base payable by commercial uses and needed to fund infrastructure to keep the city viable, the residential argument often wins. The challenge then for developers and end users begins with actually finding a piece of land and/or building where they can maintain an industrial zoning in order to build.
Raising the Roof – The Clear Height Dilemma
There are two main ways to redevelop existing land including knocking the existing structures down and starting from scratch and modifying a building to accommodate alternative needs. When redeveloping using the latter approach, we must remain cognizant that many of the urban industrial buildings were constructed to accommodate the true industrial era when manufacturing was king in North America and the generally accepted specifications of an industrial building were vastly different than today’s requirements. One of the most obvious and critical adjustments to these specifications has been the height of a buildings ceiling, otherwise known as the clear height. With manufacturing having experienced a major shift to other hemispheres on the globe, North America has truly become the land of distribution. The distribution/supply chain/logistics model then, relative to industrial buildings, requires the ability to stack product on pallets and in turn racks, as high as 30’ in most cases. Most of the industrial buildings of the industrial era had clear heights varying from 12’ to 18’ high. The question then is, what to do with a roof that is too low. “Raise It” you say…good answer. Although technology does exist throughout North America, the practicality has not yet become commonly acceptable in Canada. This is due to change in the coming years.
Environmental Clean-Up
Industrial buildings that have housed manufacturing concerns in the past often operated with environmental regulations that are not as stringent as today’s standards and while in most cases unintentional, these manufacturing processes often experienced spills and/or leakage of materials used in various processes and in many cases, partial rupturing of underground storage tanks. When these materials are mixed with moving ground water, the results have caused leaching throughout their site and those of neighbors. Another challenge then for those seeking to acquire redevelopment properties is dealing with the results of environmentally hazardous soil that is discovered upon normal testing when properties are changing the hands of ownership. There are some terrific specialty firms that deal with these issues as part of their core-competency and developers and end users rely heavily on their skills and expertise to overcome these challenges.
The trend towards redevelopment of urban industrially zoned properties to warehouse uses is here to stay and creates exciting possibilities for those contemplating this route as a solution for stated corporate objectives. With the correct guidance from those with experience navigating these waters, the process is enjoyable and is a great alternative.