Industrial / Warehouse Appraisal

Most industrial properties can be classified as either warehouses or manufacturing plants, with manufacturing plants usually including some element of warehouse space for: storage of raw materials, components of the manufactured product, and finished goods. Manufacturing space can be further subdivided into space that is general purpose and can accommodate a variety of manufacturing processes and specialty space that is designed to accommodate a specific manufacturing process.

With warehouse space comprising the entirety of or an important component of any industrial property, it is worth paying special attention to this property use. Evaluation of warehouse space includes the building itself, the truck yard areas adjacent to the building, and the location of the property in relation to both suppliers of parts and raw materials and to the recipients of the finished goods.

The configuration of warehouse space limits the storage methods that it can accommodate and is a key feature to consider. The spacing of the columns of the building cannot be modified and the proposed storage system must fit within these constraints.

Wide column spacing and a ratio of length to width for a warehouse space of approximately two to one give the user of the space the maximum flexibility in laying out the forklift aisles and storage area.

Another key consideration within the building are ceiling clear heights. Warehouse space is evaluated, not just in terms of square feet of building area, but also in terms of cubic feet of storage area. Warehoused goods can only be stacked as high as the bottom of the ceiling joists. The clear height of the ceiling represents a key component in the capacity of the warehouse.

The loading docks, as well as the areas directly behind them and the truck yard areas in front of them, are the next features to evaluate. There must be enough space between the dock doors and the stored goods for forklifts to maneuver effectively. The paved truck yard area in front of the docks must be large enough for trucks to back into and drive away from the dock doors, even when other trucks are occupying adjacent doors.

Flush docks are both the most common and preferred type of docks in most modern warehouses. Dock seals along the top and sides of the doors prevent foul weather from leaking into the space between the dock doors and the trucks, dock levelers provide a smooth journey for the lift trucks from the warehouse floor into the truck beds, and bumpers prevent the trucks from hitting the dock-height floors or levelers.

These features are elements to consider in both the property being appraised and in the comparable sales and rentals that are used for comparison in a valuation. Off-site elements, such as access to major transportation routes, are important considerations as well.

When it comes to evaluating the manufacturing components of a building, the electrical supply to the property is a major issue. Certain operations, such as plastics extrusion and aluminum manufacturing, require much higher electrical loads than what is provided to a general-purpose commercial property.

The layout of the floor space is also important. Many older buildings have had additions constructed over the course of many years, without much planning prior to the original construction as to how these additions would be oriented relative to the original building. This can result in a very irregular layout and is a significant source of functional problems.

Specialized manufacturing space that has been specifically designed for a specific manufacturing process can also present a challenge. The space might be well suited to current manufacturing operations, but in appraising its market value, the value of the space to another user must be considered. If another user would not be able to use the space as effectively as the current user, this might be a significant source of diminution in its market value.

The appraisal of industrial properties requires a somewhat different set of skills than the appraisal of office, retail, or multi-family properties. The appraiser must have familiarity with warehouse and supply chain operations, the challenges that truck drivers face, and a basic knowledge of electrical systems.