FOOD PROCESSING
The Challenges of Renovating an Existing Facility Into a Food Plant Renovating an existing facility seems faster and cheaper than going with a greenfield site — but when it comes to a food plant, that might not be the case.
By David C. Dixon, President, davidcdixonLLC
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effrey Counsell’s article in Area Development, “Siting identified by a competent existing conditions survey, i.e., a New Production Plant: A Challenge Intensifies”1, remaining life of mechanical equipment or roof leaks, etc. My goal here is to highlight the most critical, yet was an excellent discussion of a new dynamic in often missed, challenges to renovating an existing buildfood plant site selection: avoiding second-generation ing into a food plant. food plants solely due to the potential risk of pathogens. I also teach this tactic of risk management. Early in my Speed to Market career, I saw projects where First, is it faster? Maybe. second-, third- or fourthThe existing new building built generation food plants were on spec with an abnormally seen as a bargain, because strong roof structure and no their square-foot costs were floor yet? Absolutely faster, but very low. They were on the very hard to find. An existing market because they had been clean building acquired early closed down by the previous enough to begin renovations owner due to microbiological before the onset of winter, contamination! The new most likely faster. Anything buyers were thrilled that they else, it’s a toss-up. Start tearsnagged a facility at such a ing up half the floor slabs, low price. start reinforcing roof trusses, An interstitial space with access and headroom requires Jeff is one of the few real stub your toe on a few “unangood planning and 4–6 feet of height, minimum. estate executives with deep ticipated conditions,” and your knowledge of the tradeoffs inschedule advantage evaporates. volved in renovating existing buildings into food plants. Is it cheaper? Unlikely. The market is tight for good Rather, it is the norm that corporate real estate directors properties, and competing sectors have more ready cash and real estate brokers tasked with finding properties than the food sector. Try to find the perfect building in view them through the lens of a long and successful a state with recently legalized adult use cannabis! Add career in corporate real estate: unit cost, comps, incenthe cost of bringing in a larger water line, larger electritives, taxes, and perhaps demographics. Too often, the cal service, and replacing many of the floor slabs to get technical fit-for-use issues described in Jeff’s article are proper pitch and drainage and your cost advantage vs. analyzed later in the game, after investment expectagreenfield narrows. And don’t forget, these are building tions are already set. investments that are depreciated over 20+ years. They The belief that finding an existing facility is faster translate to pennies on cost-per-case. Don’t step over and cheaper than greenfield remains firmly entrenched. dollars to pick up dimes. This overview assumes the target building has no risk of pathogen contamination. It doesn’t talk about rarer Tactics to Consider problems like previous freezer floor heaving or corroded under slab drainage and washouts you could drop a The Floor: A wise man once said, “If you have a refrigerator into. It sidesteps the obvious that can be
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12/3/21 11:36 AM
