Own a 1.5 acre lot and 24k industrial building - devel. advice!

[Rob Stiefel]

My family and I own a 1.5 acre vacant lot - it has a high voltage wire setback requirement - but front of the lot is .7 acres of buildable space + parking can infringe on the powerline setback. Across a minor road, sits a 24k industrial building that is built on entire lot (grandfathered). Both sit on a major industrial highway ~16k cars per day & 18k living within 3 miles. 

Can anyone share a proforma to model NPV of just selling the vacant lot to a nationwide car wash ($1.5-$2M) - vs construction costs to build out for a QSR or something similar ? 

For the industrial building, we may tear down part of building and search for a medical office use or pharmacy chain, etc. 

My experience is in single family, so just looking for a little guidance! I am a young investor. 

Thanks !!

[Joel Owens]

Rob find out if property is within county limits only or the city. Then get a copy of the current land use map ( what the area is today ) and what the future land use map ( what the local council wants the next 15 to 20 year vision to be ) and go from there. The highest and best use with conversion of your property might not be allowed or wanted in the future for the county or city's growth plans.

Sometimes in an area something like industrial might be grandfathered in but they want retail now as area has changed or multifamily etc. If it is a mix they want they might only allow the area to be 40% housing, 20% retail, etc. You need a local broker to the area to perform a void analysis that deals with land development. From there you can see what the area's needs are for tenant expansion plans and which one pays likely the highest starting rent and has the lowest cap rate exit resale value.

That highest use from the report might not be allowed or wanted for your site. You then have to talk to a local commercial zoning attorney. They can give insight on what the local government is looking for in that area and what public likely gives the least pushback on. Even if you get the type of asset class you want approved the site plan also has to be approved which is another hurdle. The government might want building facing a certain way or a certain parking ratio with greenspace that reduces down the monetizing building portion of your site.

No legal advice given.