Purchasing undeveloped land for a commercial project can be an exciting endeavor, but it is important to be aware of potential complications that may arise. With proper due diligence and planning, you can avoid or resolve many common issues.
There are a few key things to watch out for when buying land for commercial development.
Zoning laws dictate what you can build on your property and its permitted uses. Before purchasing land, thoroughly research current zoning classifications and any restrictions. For example, if you want to build retail shops, land zoned for industrial or residential use will not work. Zoning often limits building height, density and setbacks from property lines. Get written confirmation from local zoning officials that your intended use is permissible.
Access and easements
You will want visibility and convenient access for customers and deliveries. Make sure the property has access to necessary public infrastructure, including roads and utilities. Also, investigate any easements that allow others defined legal access through or over the property. This could impact your future plans. Easements may not be readily visible, so review property surveys and deeds.
Contaminated soil, groundwater or hazardous materials onsite will increase cleanup costs dramatically. Even if the contamination happened years ago, the purchaser can be liable for costly remediation. Conduct thorough environmental assessments to rule out problems such as underground storage tanks, asbestos, lead paint or industrial waste.
Being aware of these three potential areas of concern helps commercial real estate buyers avoid expensive surprises down the road. Careful due diligence is key to ensuring the land purchased is suitable for the intended development and use. With the industrial rental industry expected to record at least 5% rent growth in 2024, make sure you consider these details to capitalize on your investment and its potential return.