Marketing and Real Estate Brokeage of Freezer Warehouse Buildings in Small Industrial Markets

Small Industrial Markets and demand for refrigerated building real estate.

There always is a limited demand in a smaller industrial market for refrigerated buildings. This demand is simply defined as "distance” from the refrigerated building that is for sale or for lease. The demand which is “distance” from the building is generally held to be 20 miles in a small industrial market. Whatever business the prospect is involved in which motivates the use of an industrial freezer or cooler warehouse building, will then always have a customer base that supports the food distribution or food processing business of the prospect. Every customer base has a tolerance on how many miles they will drive to consume/purchase any certain goods or services. There always be some variance from that "20 mile" figure according to what type of good or service will be purchased. The more frequent the consumption/purchase the less the mileage tolerance will be of the prospect’s customer base.

Most typically the prospective purchaser or lessee for refrigerated building in a small industrial market has outgrown their freezer and cooler building. Sometimes the purchaser has have been in several different facilities and will need to consolidate for one of two reasons. The first reason is that a rental property was no longer available to the prospect to occupy, for such reasons as the end of the lease term or eminent domain. The second reason is that consolidation into one single refrigerated building location will now result in lower operating costs for the prospect’s business operations.

Usually most of these businesses are owned by individuals that have a desire to purchase rather than lease so as to be able to build equity in the industrial freezer or cooler building and therefore increase their own personal net worth. Any prospective purchaser of a building will look at the replacement cost [new construction] when considering buying a used industrial food processing or distribution building for their own use. This consideration of new construction is because there is usually not any recent sales comparables a "similar and like Industrial buildings" in the small industrial market. The new construction price will always be a benchmark in establishing a sale price for the used industrial facility.

When marketing industrial real estate in a small industrial market it is always important to remember that the highest likelihood that the best prospects for the sale or lease of the refrigerated facility will be from within a 20 mile radius of that refrigerated facility. As the real estate broker saying always goes, "sell it to the neighbor".

Hawk Distribution Services, LLC has experience in offering refrigerated warehouse buildings for sale or for lease in rural industrial markets. Contact Jim Cronin, a refrigerated building real estate broker at 314-994-0577 e-mail of j.cronin@hawkds.com

To view refrigerated buildings for sale or freezer warehouse space for lease in St. Louis, Missouri and Kansas City, Missouri and other areas in the Midwest go to www.hawkds.com

Underground Refrigerated Warehouse Space Build Out

The construction buildout or Finish Out for a refrigerated food processing plant or refrigerated warehouse space within an underground warehouse facility offers many different types of operational cost savings and lower lease rental rates when it is compared to above ground new facility construction pricing of a refrigerated food processing facility a refrigerated distribution center.
Some rental rates for refrigerated processing or refrigerated warehousing can be up to 50% less than similar like facilities constructed above ground.

One additional attribute that an underground warehouse space as as compared to an aboveground new construction site is the timing required to deliver a new refrigerated processing facility. An underground facility already has most all of the infrastructure in place and ready for interior buildout where an above ground facility does not. Innerstructure include such things as municipal water and sewer, zoning ordinance approval as well as electrical service and even such things as service roads already exist in an underground facility such as 440 Bussen Underground Drive, St. Louis, Missouri 63129.

An underground warehouse facility already has the warehouse floors, ceilings and wallsand all of the utility services available and in place to the underground warehouse floor space. All that is required is to finish out of the interior floorspace to the tenant specifications. An aboveground facility using requires such things as land acquisition, architectural drawings for the facility, possibly bank financing if the facility is owned by the occupant, zoning requirements approved. Also when construction does start on aboveground facility it is always affected by weather. An underground facility is never affected by weather conditions.

Listed below are some of the specifications and attributes when considering construction build out of refrigerated food processing or refrigerated warehouse space in the greater Metropolitan St. Louis area. This underground facility is located in the southeast portion of St. Louis County and therefore has access to the Metropolitan East portion of the greater St. Louis,Missouri area.

Address: 440 Bussen Underground Road, unincorporated St. Louis County, Missouri 63129

Facility size: 119,000 total square feet. Ceiling height 24 feet. Total of 6 Truck dock doors.

Location: Greater Metropolitan St. Louis, Missouri area located in the southwest portion of unincorporated St. Louis County, Missouri and 1/2 mile from Interstate 270. Less than 5 miles from Interstate 55 and Interstate 44 highways.

Property Description: Construction proposed build out for temperature controlled distribution facility which would include cooler warehouse storage space and also refrigerated food processing areas. Ideal for repackaging and value added warehouse services for food products or food ingredients that have temperature requirements of plus 32° for cooler specifications and up to 65° humidity controlled warehouse space.

Facility Highlights: Landlord has experience in construction build out of refrigerated cold storage space, having constructed numerous cooler warehouse and freezer warehouse spaces. Also one USDA refrigerated food processing space built out.

The ambient temperature of this industrial space is 65° which results in substantially lower utility costs for refrigerating cold storage floor space. Electrical usage has a monthly cost which is constant year-round.

Employee parking adjacent office space and abundant tractor trailer parking in large common area parking lot that is adjacent to the facility.

Facility has Union Pacific Railroad service access at less than 1 mile. Mississippi River deep water barge docks less than 1 mile.

The delivery time for this type of space is dramatically and substantially less than an above ground facility.

The amount and type of tenant improvements and temperatures will affect the lease rental rate. Estimated Lease Rental Rate are available by calling Jim Cronin, a refrigerated building real estate broker at 314-994-0577 or e-mail of j.cronin@hawkds.com

Additional refrigerated warehouse buildings, temperature controlled facilities, refrigerated food processing plants and refrigerated transfer facilities (cold docks) in St. Louis, Missouri and Kansas City, Missouri and throughout the Midwest can be viewed at www.hawkds.com

Procuring Cause for Freezer or Cooler Buildings

Procuring Cause

There from time to time becomes an issue on the rightful entitlement of a real estate commission to be paid on the sale or lease transaction.

A sale or lease transaction is defined as when a Purchase Contract is signed or Lease Agreement is agreed upon.

The entitlement issue on the awarding and payment of the real estate commission is always determined by the procuring cause resulting in the sale or lease transaction.

Procuring cause shall be the primary determining factor in entitlement to compensation. Agency relationships, in and of themselves, do not determine entitlement to compensation. The agency relationship with the client and the entitlement to compensation are separate issues. A relationship with the client, or the lack a one, should only be considered in determining the procuring cause.

Many disputes will be determined by the relationship between the broker and a prospective purchaser or leasee. Consider whether, under the circumstances and in accord with local custom and practice, the broker made reasonable efforts to develop and maintain an ongoing relationship with the purchaser. Where two cooperating brokers have competing claims against a listing broker, whether the first cooperating broker actually maintained ongoing contact with the purchaser or, alternatively, whether the broker's inactivity or perceived inactivity may have caused the purchaser to reasonably conclude that the broker had lost interest or disengaged from the transaction. In other instances a purchaser, despite reasonable efforts by the broker to maintain ongoing contract, may seek assistance from another broker. Consider why the purchaser was estranged from the first broker. There may be no reason that there was an ongoing relationship between the broker and the purchaser. The issue then becomes whether the broker engaged in conduct which caused the purchaser to terminate the relationship. Among other things, by words or actions. Conduct caused a break in a series of events leading to the transaction and whether a successful transaction was actually brought about through the initiation of a separate, subsequent set of events by the second cooperating broker.

In relationship to the exclusive right to sell listings there may be from time to time disputes if a lease or a sales transaction was caused by cooperating broker and it is not clear which broker caused this sequence of events to lead to the transaction. When it is not clear, the listing broker should consult an attorney, notify the real estate commission and place the cooperating portion of the commission paid on the transaction into a non-interest bearing escrow account awaiting absolute clarification of the dispute.

In relationship to a nonexclusive listings or marketing authorization agreements the aforementioned issue with cooperating broker's still does exist and also the issue of procuring cause may also come to exist with the client of those nonexclusive listings or marketing authorization agreements.

Written by Jim Cronin, a refrigerated building real estate broker at Hawk Distribution Services, LLC and at J.Cronin@hawkds.com