How to Conduct a Feasibility Study for Industrial Development
Introduction
Before investing in industrial development, it’s critical to conduct a feasibility study to assess site viability, financial performance, and zoning compliance.
Many developers skip this step—leading to delays, cost overruns, or regulatory issues that could derail a project.
In this guide, we’ll cover:
✅ What a feasibility study includes and why it matters
✅ Key factors to evaluate before purchasing industrial land
✅ How to calculate return on investment (ROI) for a development project
1. What Is a Feasibility Study for Industrial Development?
A feasibility study is a risk assessment tool that determines whether a site is viable for industrial use.
| Category | What to Evaluate | Why It Matters |
|---|---|---|
| Market Demand | Vacancy rates, absorption trends, tenant demand | Determines if there’s a need for new development |
| Site Analysis | Soil conditions, access, utilities, zoning | Ensures the site is buildable |
| Financial Feasibility | Land cost, development cost, projected rental income | Determines if the project is profitable |
| Regulatory Review | Zoning, environmental impact, permits | Identifies legal barriers |
| Exit Strategy | Sell, lease, or hold for long-term investment | Guides financial planning |
2. Site Selection: Evaluating Land for Industrial Development
Choosing the right site is crucial for industrial development success.
🔹 Key Site Selection Criteria:
✅ Proximity to Major Highways & Ports – Reduces logistics costs for tenants.
✅ Zoning & Land Use Restrictions – Confirms the site is permitted for industrial use.
✅ Topography & Soil Conditions – Ensures stable ground for heavy structures.
✅ Utility Access – Confirms availability of water, sewer, gas, and electricity.
✅ Floodplain & Environmental Considerations – Avoids costly mitigation efforts.
📌 Pro Tip: Always order a geotechnical study and environmental assessment before purchasing land.
📖 Read more: "Zoning Laws for Industrial Tenants: What You Need to Know."
3. Calculating ROI on an Industrial Development
ROI analysis helps determine the financial feasibility of a project. Consider:
Acquisition Costs – Land price, due diligence expenses.
Development Costs – Construction, permitting, environmental mitigation.
Potential Revenue – Expected rental income or resale value.
📌 Formula: (Net Profit / Total Investment) x 100 = ROI %
4. Common Pitfalls and How to Avoid Them
🚫 Skipping Due Diligence – Leads to unexpected site issues.
🚫 Ignoring Market Trends – Can result in low occupancy rates.
🚫 Underestimating Costs – Leads to budget overruns.
📌 Solution: Always conduct a thorough feasibility study before proceeding with development.
5. Next Steps After a Feasibility Study
✅ Adjust financial models based on findings.
✅ Secure necessary zoning and permits.
✅ Proceed with site preparation and development.
📞 Need Help? Contact us today to discuss your next industrial project!
