Building an industrial estate...
Discussion
Very pie in the sky this one...
Like the thread below, for ages I've been looking for an industrial unit near home to give me some more garage space. Ideally I'd have bought one, play in it until I retire, then rent it out for some retirement income. However, the right place close to home has never become available.
However, a 2 acre piece of 'employment land' has just become available in my perfect location. I'm wondering what it would take to buy the land, build some industrial units, keep one for myself to play in, and either rent out or ideally sell the others.
I've never considered anything remotely like this before, and haven't a clue where to start!
Some really basic questions:
- How many say 400sqm units would realistically/comfortably fit on 2 acres?
- What sort of firm would a) design and b) build these for me?
- How much of the funding for the project would I realistically be able to borrow, i.e. how much would I have to try and stump up myself?!
Thanks
Jason
Like the thread below, for ages I've been looking for an industrial unit near home to give me some more garage space. Ideally I'd have bought one, play in it until I retire, then rent it out for some retirement income. However, the right place close to home has never become available.
However, a 2 acre piece of 'employment land' has just become available in my perfect location. I'm wondering what it would take to buy the land, build some industrial units, keep one for myself to play in, and either rent out or ideally sell the others.
I've never considered anything remotely like this before, and haven't a clue where to start!
Some really basic questions:
- How many say 400sqm units would realistically/comfortably fit on 2 acres?
- What sort of firm would a) design and b) build these for me?
- How much of the funding for the project would I realistically be able to borrow, i.e. how much would I have to try and stump up myself?!
Thanks
Jason
Re question 2...
You'd have an architect pull together the general layout, aesthetic approach and floor plans. A structural engineer will handle the foundations, frame calculations, loadings et al. A civil engineer (probably from the same company) will do the drainage and groundworks (cut and fill across site). Mechanical and electrical services will be managed by an M&E consultant working client side. Your QS will do the numbers.
You may have a PM; in that instance they'll collate a coordinated design package with (much) assistance from the architect - otherwise that'll fall within the architect's remit.
Depending on whether you go out traditional (all information produced client side, contractor builds it out) or design & build (your team produce a design to varying levels of detail and transfer responsibility to the contractor for interpreting, finalising and building out) the above will take varying amounts of time and cost to produce.
Your QS or PM will manage tendering, either single stage or two stage, depending on preference.
Probably in region of £60 - £80/sqft generally for the base build, excl site acquisition, VAT, finance, fees etc. etc.
ETA: should have said you may have a planning consultant on board to progress the application, together with ad-hoc engagements of specialist works providers - ground contamination (to inform remedial works requirements), ground conditions (to inform structural engineer's foundations approach) etc.
You'd have an architect pull together the general layout, aesthetic approach and floor plans. A structural engineer will handle the foundations, frame calculations, loadings et al. A civil engineer (probably from the same company) will do the drainage and groundworks (cut and fill across site). Mechanical and electrical services will be managed by an M&E consultant working client side. Your QS will do the numbers.
You may have a PM; in that instance they'll collate a coordinated design package with (much) assistance from the architect - otherwise that'll fall within the architect's remit.
Depending on whether you go out traditional (all information produced client side, contractor builds it out) or design & build (your team produce a design to varying levels of detail and transfer responsibility to the contractor for interpreting, finalising and building out) the above will take varying amounts of time and cost to produce.
Your QS or PM will manage tendering, either single stage or two stage, depending on preference.
Probably in region of £60 - £80/sqft generally for the base build, excl site acquisition, VAT, finance, fees etc. etc.
ETA: should have said you may have a planning consultant on board to progress the application, together with ad-hoc engagements of specialist works providers - ground contamination (to inform remedial works requirements), ground conditions (to inform structural engineer's foundations approach) etc.
Edited by iphonedyou on Tuesday 4th April 14:25
I got a quote recently for a portal frame shed for my farm, 20m x 10m x 5m to the ridge: £15k+vat. That was for the frame, a roller shutter door, insulated roof sheeting and installation.
On top of that you'd need the concrete floor and pads, blockwork walls, windows/doors, bogs, lighting, power, drainage and services connections. Plus fees. Plus the cost of the land in your case. I'd guess a 400m2 unit could easily cost you £60-80k all-in.
Commercial lease rates vary wildly according to the area you're in, you'd be best talking to a local commercial estate agent or at least having a look to see what the going rate for local units would be
On top of that you'd need the concrete floor and pads, blockwork walls, windows/doors, bogs, lighting, power, drainage and services connections. Plus fees. Plus the cost of the land in your case. I'd guess a 400m2 unit could easily cost you £60-80k all-in.
Commercial lease rates vary wildly according to the area you're in, you'd be best talking to a local commercial estate agent or at least having a look to see what the going rate for local units would be
Go to www.rics.org and find a surveyor to talk to who knows the market in your area.
You may be looking at chucking in a good 40% equity yourself when building.
Do your market research on what values, market and market rents are. If you fail to get them let you'll be liable for the empty rates for example. Marketing periods are easy to neglect when you see the headline figure...and don't forget to allow for an appropriate amount of rent free as well
In terms of coverage work on a basis of 40% of site area being developable - so 2 acres is 87,000 sq ft give or take, so that's a total of say 35,000 sq ft, so about 3,250 sq m - giving you 8 units of 400 sq m.
Roughly.
You may be looking at chucking in a good 40% equity yourself when building.
Do your market research on what values, market and market rents are. If you fail to get them let you'll be liable for the empty rates for example. Marketing periods are easy to neglect when you see the headline figure...and don't forget to allow for an appropriate amount of rent free as well
In terms of coverage work on a basis of 40% of site area being developable - so 2 acres is 87,000 sq ft give or take, so that's a total of say 35,000 sq ft, so about 3,250 sq m - giving you 8 units of 400 sq m.
Roughly.
My rough guess would be £2,100,000 build costs, and if in the North West of England, land purchase costs of anywhere between £300,000 and £800,000. Assumes a scheme of 8 units totalling 35,000 sq ft.
As for finance, you might get 60% LTV on the land purchase costs, but borrowing the money for the build costs will be far more tricky, not many traditional lenders will look at development finance on speculative schemes. And those lenders that will lend on spec dev will charge eye watering rates.
As stated above you would absolutely need professional advice, I've seen so many schemes where the built spec is completely wrong for the end user, resulting in negative impacts on value. A good agent should know exactly what spec would be required.
As for finance, you might get 60% LTV on the land purchase costs, but borrowing the money for the build costs will be far more tricky, not many traditional lenders will look at development finance on speculative schemes. And those lenders that will lend on spec dev will charge eye watering rates.
As stated above you would absolutely need professional advice, I've seen so many schemes where the built spec is completely wrong for the end user, resulting in negative impacts on value. A good agent should know exactly what spec would be required.
By absolute chance I own my own mini trading estate
I bought two buildings from three on their own little estate of about 1 acre and refurbished and work in one, spent a lot of money on the second ensuring it would appeal to the right tenant and rented it out. Only small and the main building is 2200 sqft and the other 1500 sqft
I was given the option to buy the third a couple of years ago and again refurbished and currently part use myself and part let.
Personally I think a great investment and the financial benefits are worthwhile. Of course I declare the income and pay tax, you can offset mortgage interest against your tax but with a rate of 1% above base and a mortgage 4/5's of f-all that doesn't add up to much. Bear in mind I didn't have to rebuild but did spend the right money on refurbishing and that doesn't come cheap.
I'm hoping that given the location and my neighbours at some stage we'll apply for planning which may increase the value by a few quid.
Certainly worth investigating I would suggest.
I bought two buildings from three on their own little estate of about 1 acre and refurbished and work in one, spent a lot of money on the second ensuring it would appeal to the right tenant and rented it out. Only small and the main building is 2200 sqft and the other 1500 sqft
I was given the option to buy the third a couple of years ago and again refurbished and currently part use myself and part let.
Personally I think a great investment and the financial benefits are worthwhile. Of course I declare the income and pay tax, you can offset mortgage interest against your tax but with a rate of 1% above base and a mortgage 4/5's of f-all that doesn't add up to much. Bear in mind I didn't have to rebuild but did spend the right money on refurbishing and that doesn't come cheap.
I'm hoping that given the location and my neighbours at some stage we'll apply for planning which may increase the value by a few quid.
Certainly worth investigating I would suggest.
Gassing Station | Business | Top of Page | What's New | My Stuff