High demand for online purchases and fast deliveries has created opportunities for industrial property owners. As reported by the Star Tribune, a surge in warehouse space buyers across Minnesota broke sales records during the second quarter of 2021.
Industrial property sales reached an all-time high of $462 million. As noted in a report by Jones Lang LaSalle, commercial tenants broke another record by seeking 11 million square feet of industrial space rentals throughout the Twin Cities metro area.
Opportunities for builders and developers
Property owners with vacant commercial buildings may find new opportunities as developers grow eager to convert empty office spaces into warehouses. Trends in real estate development include construction plans for distribution centers, storage units and loading docks.
Minnesota’s vacant landowners may reportedly ask for as much as $7 per square foot. Space for industrial buildings in the Twin Cities may add 1.8 million square feet by the second half of 2022.
Contracts may require a land-use variance or zoning contingency clause
Buyers seeking raw land or vacant buildings to develop industrial spaces may require a change in the property’s zoning or a land-use variance. According to the Stearns County Minnesota website, a developer must obtain Planning Commission approval to alter a land use. The Planning Commission typically considers how a project affects local traffic congestion and the public’s health and safety.
By adding a zoning contingency clause to their purchase agreements, the involved parties may avoid issues resulting from severed contracts. If local zoning boards do not approve a buyer’s construction plan, it may allow sellers to obtain a remedy. Minus a local planning board’s construction approval, a buyer may consider backing out of an agreed-upon contract. Sellers may wish to include a means for relief in the event of a breach.