Commercial Investment Real Estate September/October 2019 | Page 25

Keep in mind that any costs for extending utility service or adding capacity are typically passed along to the client, and these costs need to be calculated upfront to determine the feasibility of the project. The last thing that you want after visiting a location is to realize that a water tank must be installed to accommodate the building’s sprinkler system. Incentives and/or Grants Should the proposed project require adding new or expanded service to meet a minimum demand, many states and communities offer incentives to eliminate or defray costs to the company or developer. Cost-avoidance grants include money for water/sewer upgrades or exten- sions, road improvements, natural gas upgrades or exten- sions, and electrical improvements. The grants can be paid upfront directly to the company or over a certain time period. Typically, these incentives are performance-based, and the company receiving the grant is required to cre- ate and maintain new jobs and investment for a specified time period. Other incentives from utility companies could include rebates (often on a sliding scale over a certain time period) based on the company’s utility usage, which can be advantageous for a company during the beginning stages of a project. Again, knowing the requirements going into a project is paramount to maximizing any incentives and/or grants that might be available. Site Evaluation Assistance Utility companies can provide additional value to states and communities as well — which, in turn, helps the potential buyer — by aiding in the evaluation of a site for develop- ment. Development is a timely process, so most corporate site-selection projects will quickly eliminate locations that do not have the basic information readily available. Knowing demand for electrical, water, sewer, natu- ral gas, and telecommunication services allows potential developers to easily vet a site to determine if it should be considered for the project. Utility companies help bridge any knowledge gaps. Many utilities provide funding for communities or local economic development organiza- tions to assist with basic due diligence. Typically, this early legwork will include verification of zoning and location of electricity, water, sewer, and natural gas, along with their corresponding capacities. Additionally, high-level mapping may be provided to outline any possible wetland, easements, CIREMAGAZINE.COM and topographical challenges. Phase 1 environmental site assessment and some limited geotechnical testing to deter- mine the suitability of the underlying soil on the site would be the next steps. Having these deliverables readily available when initially requesting information and planning visits will help poten- tial developers understand the site quickly and effectively. For any broker who lists land sites for industrial develop- ment, a common value-add from a utility company is a grant to do site evaluation to make a land site “shovel-ready.” Plan Your Work A community might have all the other attributes for a new plant or distribution center (for example, labor availability, favorable labor costs, and transportation) but a specific property could fall short in regard to utility service. Having the specific knowledge of utility exten- sion, capacities, and approvals in place could help a com- munity win the project. Conversely, companies working with site-selection professionals need to fully understand their own utility needs — not only for the project at hand but also for some level of growth at the new facility. If a community can only handle today’s utility needs but not those necessary for future growth, the project manager needs to consider alternative locations. Conversely, when brokers receive inquiries on a site, they need to make sure they fully understand the specific utility demands not only for the inquiry at hand, but for some level of growth of the proposed facility. Grant Miller and Don Moss are partners specializing in industrial real estate with Colliers International in Charlotte, N.C. Contact them at [email protected] and [email protected]. September | October 2019 23