Your New-Site Development Checklist

Whether you are purchasing land with a specific project in mind or speculating on a property you feel is too good to pass up, you need to do your homework before putting money down. Otherwise, you might commit finances to a project that becomes tied up in zoning disputes or invest in a bargain-priced building with unexpected costs down the road. You should consider location, zoning, utilities and costs before purchasing commercial real estate.

Location
You can bet location is a primary concern for any potential business occupant, says Richard Weisser, a ERA United Realty Group associate broker based in Peachtree City, Ga. The location has to be appealing enough that you can fill it. Unless you’re purchasing the property for a specific tenant, you will probably want a location that appeals to a variety of businesses, such as a populated business district. “Successful businesses go into areas where other businesses are established,” Weisser says.

But purchasing property in a thriving business district can get expensive and can limit your return on investment. Looking at a property in a less-established commercial area can bring you higher returns, but keep in mind that most businesses still will want to be in populated areas. “Traffic plus visibility leads to walk-in business,” Weisser says. Wherever you look, consider locations that are easily accessible and have high traffic.

Zoning
Always make sure the zoning is correct for what you want to build, says Craig Failor, village planner for the Village of Oak Park, Ill. Zoning can affect everything from building height and setbacks to the amount of parking required and type of tenants you can bring into a given location.

Check that the property is zoned for how you want to use it before you start the project because getting property rezoned can be long and time-consuming, Weisser says. Often, rezoning can require a public hearing, and in some cases, it is nearly impossible.

Some municipalities discourage “spot zoning” where a property is zoned differently than all of the properties surrounding it, Failor says. In this case, your chances of getting a zoning change are much better if your property is on the periphery of a zoning district.

Failor suggests making the sale of the property contingent upon zoning approval. This typically can be covered by asking for what Weisser describes as a period of due diligence. This period is usually between 30 and 90 days and allows you to assure proper zoning.

Utilities
Another concern for your new-site development is the utilities available. You should establish whether the property has access to sewage, electricity, phone and Internet. Any tenant you find for the space is going to expect these basics, so it’s important that you know they’re available or factor into your purchase price the cost of making them available.

If you are looking for a certain type of tenant, go beyond just making sure that utilities are available and look into what that tenant’s unique needs might be. For buildings with a higher-than-normal power or sewage load, you might need to get some of the utility connections resized, Failor says. And if you’re hoping to cater to retail businesses, you could limit your potential tenants if wireless or high-speed Internet isn’t available.

Costs of Acquisition
Finally, when evaluating the price of a property, be sure to factor in additional costs you can expect to incur when building on or renovating a property, or costs of acquisition, Weisser says.

In his experience, drainage problems are the most common issues with new building construction. You have to make sure there is somewhere for water runoff to go that won’t flood the storm system. If this is the case, you might have to construct a retention pond, which could be costly. New construction sites also might need major landscape renovations like clearing trees or slope reduction.

For existing buildings, research any demolition or construction costs before making a purchase. Also take a look at whether the property has sufficient parking space and can support delivery traffic if you’re looking to attract retail customers.

Note: This content is for informational purposes only. Lowe’s makes no warranties and bears no liability for use of this information. The information is not intended, and should not be construed, as legal, tax or investment advice, or a legal opinion. Always contact your legal, tax and/or financial advisors to help answer questions about your business’s specific situation or needs prior to taking any action based upon this information.