The Challenges of Renovating an Existing Facility Into a Food Plant

Jeffrey Counsell’s article in Area Development, “Siting a New Production Plant: A Challenge Intensifies”, was an excellent discussion of a new dynamic in food plant site selection: avoiding second-generation food plants solely due to the potential risk of pathogens. I also teach this tactic of risk management. Early in my career, I saw projects where second-, third- or fourth-generation food plants were seen as a bargain, because their square-foot costs were very low. They were on the market because they had been closed down by the previous owner due to microbiological contamination! The new buyers were thrilled that they snagged a facility at such a low price.

Jeff is one of the few real estate executives with deep knowledge of the tradeoffs involved in renovating existing buildings into food plants. Rather, it is the norm that corporate real estate directors and real estate brokers tasked with finding properties view them through the lens of a long and successful career in corporate real estate: unit cost, comps, incentives, taxes, and perhaps demographics. Too often, the technical fit-for-use issues described in Jeff’s article are analyzed later in the game, after investment expectations are already set.

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