Lease or Buy a Food Processing Facility – Be Three Steps Ahead

Author Charlie Cutler Read bio
Tags: food processing facilities lease
Date: August 23, 2021

E-commerce is going through an evolution, especially the one dealing in the food and beverage sector, where customers are used to getting their delivery fast, with specific products, and well-rounded with a nice and fast shopping experience.

The market is especially demanding in the US, and if you are one of many who are willing to taste their luck in the food processing market – it will be helpful to keep in mind some of the most important factors when opening a food processing factory or facility that deals with food of any kind.

Here’s how I would arrange things in order to make them work for my business.

1. Decide: Modernization Of The Existing or Entirely New Site?

A major role in deciding whether your future food processing business will thrive in – your location; more specifically, the place you are going to settle, and a little bit the neighborhood you’re surrounded with.

Also, the workforce you need to attract is also going to look for a place that’s modernized to meet the needs of the business, or a place that is (custom) built especially for this.

If you are located in some competitive, urban market such as the one we have in California, finding suitable land available to build a new facility can be quite tricky (aggressive competition, prices, prohibitions, etc). Here, a practical thing to do is consider modernizing an existing food processing facility.

In a retrofit or renovation scenario, be mindful of creating infrastructure that will benefit your business, such as:

  • Wash-down walls
  • The height and temperature of cold room systems
  • The location and size of floor drains
  • The volume and type of clarifier or separation systems handling wastewater
  • The quantity, pressure, and pipe size of incoming water supply

But, if your intention is to build new….

It is best to look for land located in more secondary, even a little bit rural markets. Here, the land and the construction fees tend to get more affordable. You can also review some of these options:

  1. Whether to buy a new property and be the first company to build something
  2. Buy an unfinished building (usually from a developer) and customize it to your needs
  3. Build the property from scratch (buy land and hire a general contractor)

All of these three cases have their pros and cons. 

With the first one, you will not have to wait for entitlements, and the process can be quite efficient and fast; the second option offers the possibility to build a property based on your requirements, adding amenities important for your business, while the third option gives you the ability to negotiate economic incentives from the local municipality.

Man examining food in a factory

2. Rethink: The Production Process

A food production plant needs to be able to accommodate the specific needs of food and products being manufactured there. 

Some plants only pack dry products, or they make them, whereas the ones dealing with liquid or raw ingredients have the equipment to store, heat, mix and cool those types of foods.

These distinctive property characteristics will affect your property search, and in the end, the type of food processing you are willing to engage in.

For example…

If your food production process uses robust machinery, then warehouses will be the primary spots on your search-list criteria.

And If your food production process requires coolers, freezers, or cold rooms, they need to be built inside the property.

3. Important: Engage Trusted Advisors

Maybe I should’ve started with this point of the story.

But – engaging with trustworthy contractors, industrial engineers, and industrial real estate specialists will be the first step to take towards establishing any business facility.

Real estate professionals possess the expertise required to help you accurately assess the costs (for modernization of an existing plant or building a new one), improve your production process once you move into your business, and enable additional automation along the line.

Unusual factory exteriors

Real Estate Advisors Help You Find Certified Properties

And this is not a drill. Certified buildings are equally as important as the food that goes in – since it is the food that goes in, after all. Food processing businesses have become more regulated, with a larger demand for transparency within the food supply chain.

Food processing plants have to be USDA and FDA certified. This can also serve as an advantage in shortening the timeframe from lease signing or closing the regulatory board approval and opening of the plant.

Using USDA or FDA as a keyword within IPG, and we will help you identify such properties. We help you specifically clarify important items within the facility, and negotiate food processing plant leases and purchases.

Undertaking the process of learning how to buy or lease a food processing facility can be an exciting experience – partnered with the right people. No doubt it will be an opportunity where you will learn a lot about construction and working with developers, and feel the need to analyze the real estate market and economic incentives.

But only through all of these aspects of the process, you will put yourself one step closer to materializing your dream of opening up your ideal food facility.