BUSI401 CHAPTER 13

Question 1

Industrial properties
2 Broad Categories

Answer 1

Industrial buildings are often described as falling into one of two broad categories: light to medium industrial and heavy industrial or special purpose.

Question 2

Common examples of light to medium industrial buildings are as follows:

Answer 2

Common examples of light to medium industrial buildings are as follows:

• General purpose storage warehouse — may be single- or multi-tenanted

• Distribution warehouse

• Light manufacturing

• Automotive and truck repair shop

• Commercial sales and storage

• Lumber yards

• Big-box retail stores

• Flex buildings combining significant office and display space along with warehouse space

Question 3

Explain / describe Heavy Industrial Buildings

Answer 3

Heavy industrial buildings generally house some form of capital manufacturing, assembly, or process associated with the petrochemical, mining, and oil and gas industries.

Question 4

Examples of Heavy Industrial

Answer 4

Examples of heavy industrial buildings are as follows:

• Auto manufacturing plants

• Ship building and fabrication plants

• Plastics and chemical manufacturing plants

• Mineral extraction plants involving smelting, crushing, and concentration

• Oil and gas refineries and related buildings

• Pulp and paper manufacturing

• Sawmills and speciality forest product plants

• Livestock rendering plants and other food plants

• Steel manufacturing

• Concrete and asphalt batch plants

• Metal recycling plants

Question 5

Defining attribute of heavy indusrial buildings?

Answer 5

A defining attribute of heavy industrial buildings is that they are generally designed to fulfil a specific industrial process associated with a specific industry such as the forest industry, oil and gas, or manufacturing sectors.

Question 6

Why are Heavy Industrial Buildings difficult to adapt to different purposes?

Answer 6

These buildings are often difficult to adapt to different purposes once the original use for which the building was designed has ended — giving rise to the special purpose nature of the improvements. When the original use for these buildings has ended, there is often considerable obsolescence in the building shell since the cost of conversion to an alternative light industrial or commercial use is very high, especially when remediation of site contamination (associated with former use) is required. The economic life of the building is closely tied to the economic life of the industrial equipment and machinery (the industrial process) that the building houses.

Question 7

Another factor that distinguishes light to medium industrial from heavy industrial buildings?

Answer 7

Another factor that distinguishes light to medium industrial from heavy industrial buildings is the impact of the processes and uses that occur within the building.

For example, smelting, steel, chemical, and pulp manufacturing have high environmental and human impacts, and attract very high levels of monitoring and controls.

These uses attract the strictest land-use measures through zoning and other controls. In contrast, light and some medium industrial buildings and related uses may be found in a wider range of locations within a typical North American city since the environmental and human impact is far less.

Question 8

Defining characteristics of a manufacturing building?

Answer 8

The defining characteristics of a manufacturing building are heavy sub-structures and floor systems (to support heavy machinery loads), high ceilings with travelling craneways, large bay doors (14 to 16 feet), and high capacity electrical service.’ There may be distinctly different sections in a building, with varying ceiling heights, clear spans or bay sizes, interior and exterior finishes, construction materials, and building services.

Question 9

Discuss examples of obsolescence in the pulp and paper industry

Answer 9

Examples of obsolescence are common in the pulp and paper and forest products industries.

A number of pulp mills in eastern Canada have shut down due to declining pulp markets and high production costs relative to lower cost producers in the US and western Canada.

Industrial (special purpose) buildings housing the equipment required in the manufacturing process such as the steam and recovery boiler and pulp digesters often become obsolete at the same as the equipment, with replacement of the equipment sometimes leading to the demolition of the associated buildings.

Question 10

Warehouses are used to store materials pending their shipment off-site. Again, the proportion of space allocated to specific uses will vary, but a typical ratio is _ _ _ _ _ _ _ _ _ _ _

Answer 10

Warehouses are used to store materials pending their shipment off-site. Again, the proportion of space allocated to specific uses will vary, but a typical ratio is 10% office space and 90% warehousing.

Question 11

The US Whole Building Design Manual lists three main types of warehouses, as follows:

Answer 11

The US Whole Building Design Manual lists three main types of warehouses, as follows:

• Heated and unheated general purpose warehouses that are intended to provide bulk, rack, and bin storage, and space for shipping and receiving, packing, crating, etc.

• Refrigerated warehouses that provide cold storage for perishable food and other goods. This includes chilled and freezer space.

• Controlled humidity warehouses that are similar to general warehouses with the inclusion of vapour barriers to maintain humidity at target levels.

Question 12

Differences between Warehouses &
Distribution Centres

Answer 12

Warehouses store goods for varying periods, whereas distribution centres are designed for the movement of goods. They are built to accommodate the requirements of modern materials handling techniques.

As such, distribution centres typically have more docks and loading doors, usually along a minimum of two walls, and will have lower site coverage to facilitate the manoeuvring of trucks and allow for the parking of trailers or containers.

Question 13

Define Cross Docking

Answer 13

Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between.

Question 14

Describe Flex Industrial

Answer 14

A significant development in recent years involves the construction of buildings intended for a combination of commercial and industrial tenancies, often with condominium/strata’ title tenure.

Flex industrial buildings are defined as those “designed to be versatile and may be used in combination with office, research and development, quasi-retail sales, industrial processing, or high tech”.

Question 15

Describe Typical Flex Buildings

Answer 15

Flex buildings are usually one or two storeys high with at least half the space designed for office layout, ceiling heights can go up to 16 feet, and the majority of units have overhead doors (either grade level or dock high delivery doors). Flex industrial space provides versatility — tenants can build out additional office space with drop ceilings and create showrooms, while still having relatively high ceilings for production, processing, or warehousing.

Office space in flex buildings is usually about 10% of total floor area, and it may be located in a two-storey portion at the front of the building. If the business is sales-oriented, the main floor of the office area will typically be used for display or sales purposes.

The remainder of the building is usually clear span, general-purpose light manufacturing, warehousing, distribution, and shop space.
Developers of industrial multi-tenanted (e.g., rental) buildings often prefer to keep the costs low, in comparison to industrial multi-tenanted buildings (generally condominium/strata-title) developed for sale, which often have a higher quality of finish to enhance appeal.

Question 16

**NOTE ONLY

There are a number of specialized warehouse and distribution properties. A cross dock warehouse is designed to quickly redistribute containers or other shipments for movement into local markets and vice versa. Cross dock facilities located near borders will have sections that are “bonded” or pre-cleared to pass through customs.**

Answer 16

**NOTE ONLY

There are a number of specialized warehouse and distribution properties. A cross dock warehouse is designed to quickly redistribute containers or other shipments for movement into local markets and vice versa. Cross dock facilities located near borders will have sections that are “bonded” or pre-cleared to pass through customs.**

Question 17

Describe Prestige Industrial

Answer 17

Some modern production facilities blur the distinction between industrial and commercial real estate, such as software and high-tech manufacturers (where the premises resemble fully finished office space), television and music studios, and high-fashion distribution outlets. Since these businesses involve high-paying jobs and have an element of prestige, planners encourage these uses and they tend to compete for quality locations.

Prestige industrial facilities are high quality developments, with substantial office space, and are usually located in a controlled industrial park. Features might include large computer rooms and specialized areas for activities such as high volume data processing. There will be limited storage or manufacturing space. Prestige industrial buildings are often multi-tenancy and can involve structured parking. Exposure and location are frequently significant factors affecting their appeal.

Question 18

APRON SPACE

Answer 18

The space required for a transport truck to manoeuvre and reverse into a building loading bay is called apron space.

Question 19

MINIMUM APRON SPACE

Answer 19

According to industry standards, a transport truck with an overall length of 65 feet requires a minimum apron space of 135 feet’.

Question 20

LOADING FACILITIES NOTES

Loading facilities may be either dock height or at grade level. Docks typically have mechanically operated levelling to provide for ease of forklift access from transport trucks into the warehouse and vice-versa. Loading bay doors may open manually, electrically, or automatically, occasionally with safety features or automatic dock height levelling devices to facilitate loading and unloading trucks.

Loading bays to a plant or warehouse should normally be under cover. For warehouses, often the roof is carried out 8 feet to 10 feet to form a canopy. Under this canopy, a loading dock is built to the normal height of the tailgate of a truck or to deck height if the loading is to a flat or box car. Some properties may have a railway spur with an enclosed rail car shed. Bay door openings are generally protected by overhangs and with overhead exterior lighting for 24-hour loading and unloading.

The most efficient configuration for small bay warehouses is a front-loading configuration, where the loading door is adjacent to the unit entry door. However, the market usually prefers rear-loading designs that better accommodate front office and show room layouts. The latter design generally markets better and achieves higher prices.

Answer 20

LOADING FACILITIES NOTES

Loading facilities may be either dock height or at grade level. Docks typically have mechanically operated levelling to provide for ease of forklift access from transport trucks into the warehouse and vice-versa. Loading bay doors may open manually, electrically, or automatically, occasionally with safety features or automatic dock height levelling devices to facilitate loading and unloading trucks.

Loading bays to a plant or warehouse should normally be under cover. For warehouses, often the roof is carried out 8 feet to 10 feet to form a canopy. Under this canopy, a loading dock is built to the normal height of the tailgate of a truck or to deck height if the loading is to a flat or box car. Some properties may have a railway spur with an enclosed rail car shed. Bay door openings are generally protected by overhangs and with overhead exterior lighting for 24-hour loading and unloading.

The most efficient configuration for small bay warehouses is a front-loading configuration, where the loading door is adjacent to the unit entry door. However, the market usually prefers rear-loading designs that better accommodate front office and show room layouts. The latter design generally markets better and achieves higher prices.

Question 21

SMALL BAY WAREHOUSES

Answer 21

The most efficient configuration for small bay warehouses is a front-loading configuration, where the loading door is adjacent to the unit entry door. However, the market usually prefers rear-loading designs that better accommodate front office and show room layouts. The latter design generally markets better and achieves higher prices.

Question 22

CRANEWAYS

Answer 22

Service shops and heavy industrial buildings will usually have overhead travelling craneways. These cranes vary considerably in lifting capacity. A travelling craneway can easily cost up to $100,000 to acquire and install, depending on the length of the craneway, lifting capacity, and need for building reinforcement.

Since craneways can generally be removed from the building without impact on the building structure, it is important for a real estate analyst to understand whether a building, offered for sale or lease, includes the craneway.

Question 23

STEEL RACKING

Answer 23

A common feature found in warehouses is steel racking and steel decks (mezzanine storage). Racks and steel mezzanines must be firmly secured to the warehouse floor for safety and seismic stability under current building codes. Since racking can be removed and easily re-installed elsewhere, owners and purchasers negotiating the sale of a building will generally specify whether the racking is included in the sale or lease agreement.

Question 24

DECOMMISSIONING

INDUSTRIAL BUILDINGS

Answer 24

Industrial buildings are often constructed to meet the specific requirements of a particular business enterprise and on decommissioning may contain specialized equipment or structures no longer considered suited to the highest and best (alternate) use of the property.

The cost to remove or remedy these features, and the added cost associated with their lack of utility, must be recognized.

Question 25

CLEAR SPAN

Answer 25

Anywhere from 21 to 35 feet. Many smaller warehouses can be operated with a clear span of 15 to 20 feet, but higher ceilings might be standard in the market.

Question 26

MEZZANINE STORAGE AREAS

Answer 26

Mezzanine office and storage areas are common in most warehouse buildings.

Some mezzanine ceiling heights in older warehouses may be less than 8 feet. Raising the office or storage area off the main floor allows the area underneath to be used for additional office, storage, or other purposes.

Such mezzanine areas can be constructed or added to after the original construction of the building. Mezzanine space may or may not be included in the rentable area and/or net rent, but is generally considered part of the gross building area (depends on local leasing practice).

Question 27

Industrial Land

Early Twentieth Century

Answer 27

Industrial Parks

In the early twentieth century it was common for manufacturing and even heavy industry to be located in highly urbanized areas due to the need to be close to major transportation corridors and hubs including railway, rivers, and major lakes, and the workforce. Industrial areas were historically notorious for being dirty, smoky, and generally run-down.

Question 28

Industrial Land
Mid Twentieth Century

Answer 28

In the mid-twentieth century land-use planners and political leaders became increasingly sensitive to the impact of industrial use on the environment, human health, and safety. Land-use controls increasingly classified industrial types by impact, with different controls depending on level of impact.

Question 29

Evolution of Industrial Land

Answer 29

A second, related approach in urban and suburban areas was to segregate industrial from commercial and residential uses through land-use planning tools such as zoning and development permit processes, creating distinct industrial precincts or neighbourhoods.

The planning concept was to alleviate the negative impact of industrial uses in the urban core by shifting some industry to the suburbs. This segregation of industrial uses from other commercial and residential uses coined the now-popular term industrial park.

Question 30

Newly created Industrial Parks

Answer 30

These new developments were close to major transportation routes but away from residential neighbourhoods.

The idea was to attract industry to these planned industrial communities offering more consistency of use, design, and appropriate infrastructure (wider roads, sufficient hydro capacity, etc.).

Question 31

Advantages of Industrial Parks

Answer 31

In addition to an improvement in the environment and reduction of risk to human health there are a number of economic advantages to the industrial park concept, as follows:

• It is possible to spread the capital cost of providing higher than typical capacity hydro (high-voltage), gas (higher pressure mains), telecom, roads (to withstand higher loads), water mains, railways, and other infrastructure among multiple users within the park.

• The concentration of all the industrial infrastructure requirements in one location is very appealing to new industrial tenants or occupants.

• It is easier and more cost effective to introduce environmental controls and monitoring if industrial uses are concentrated in one location.

Question 32

BUSINESS PARK

Answer 32

A special form of industrial park is known as a business park. These parks consist of multiple modern buildings with attractive landscaping, internal road networks, and good parking. Buildings in business parks typically have higher levels of office finishes and, in some cases, big-box retail uses, in addition to traditional warehousing and light manufacturing.

Question 33

INDUSTRIAL SITE INFLUENCES

Answer 33

The appeal of a potential industrial site to a developer or owner-occupier will be influenced by various factors:

the utility or the ability of the site to meet the intended use;

local infrastructure, e.g., hydro capacity;

location in relation to major transportation routes, related busi­nesses, and markets; and

opportunities for expansion.

Question 34

NOTE ONLY

Factors that might significantly reduce the value of a site for commercial or residential uses, such as the presence of overhead high voltage towers or a high pressure gas line, may have much less impact on the value of an industrial property provided the right-of-way for an underground utility corridor or overhead transmission line does not reduce the useable area of the site.

Answer 34

Factors that might significantly reduce the value of a site for commercial or residential uses, such as the presence of overhead high voltage towers or a high pressure gas line, may have much less impact on the value of an industrial property provided the right-of-way for an underground utility corridor or overhead transmission line does not reduce the useable area of the site.

Question 35

DISCUSS MULTI-MODAL TRANSPORTATION

Answer 35

The desirability of land characteristics depends to a great degree on the specific use and trends in industrial economics and practices.

For example, consider the increasing importance of multi-modal transportation sites that combine two or more transportation routes, such as truck and rail or truck and ship or barge.

The SeaSpan Annacis Island Marine Terminal on BC’s Fraser River is a multi-modal site. This site provides “short-sea” shipping by barge for railcars and roll-on/roll-off truck trailers, to connect BC industries with access to the major railways in Western Canada. Another example is the Sault Multi-Modal Terminal at Sault Ste. Marie, Ontario. The terminal is located near a commercial border crossing between Ontario and the United States and provides multi-modal warehousing involving rail to truck or truck to rail transportation logistics.

Question 36

CONSIDERATIONS FOR AN INDUSTRIAL SITE

Answer 36

Dimensions and shape. A rectangular site is preferred since it offers more options for building siting than a square or irregular site.

Frontage. An industrial site must have sufficient frontage for good building exposure and safe entry and exit points for truck and other vehicle traffic. Transportation uses such as distribution warehouses will have frequent transport truck movements. Unimpeded separate entry and exit points with good sight lines will be desirable site attributes for these industrial uses.

Total area. The area must be adequate not only to meet the require­ments of the building, landscaping, and parking, but also to serve surface (yard) storage, internal site transportation and access needs, and buffer requirements. Users contemplating expansion may require land to meet these future requirements.

Traffic exposure. Some industrial users, particularly service commer­cial, may benefit from high volumes of traffic. The exposure is often along a major roadway, such as a highway. The property may even have poor access onto the road, but still allows the company’s signage to be readily seen. For example, the success of a forklift sales and rentals business may depend on visual exposure from major arterial routes, particularly for out-of-town customers.

Question 37

INDUSTRIAL SITES

Dimension & Shape Considerations

Answer 37

Dimensions and shape. A rectangular site is preferred since it offers more options for building siting than a square or irregular site.

Question 38

Industrial Site
Access Considerations

Answer 38

Access. As discussed earlier, the size and capacity of arterial roads and local streets and lanes will impact the appeal of an industrial site. In marine-oriented industrial uses, water frontage and access to navigable water are important factors.

Multi-modal operations are typically located near major highways, railways, and marine shipping terminals. In some instances, local government restrictions on the size of entrance lanes can affect utilization.

One-way streets or solid centre boulevards can adversely affect ease of access and minimum turning radius of transport trucks. Controlled intersections are generally an asset to improve the efficiency of vehicle movement.

Question 39

Industrial Sites

Traffic Exposure Considerations

Answer 39

Traffic exposure.

Some industrial users, particularly service commer­cial, may benefit from high volumes of traffic. The exposure is often along a major roadway, such as a highway. The property may even have poor access onto the road, but still allows the company’s signage to be readily seen.

For example, the success of a forklift sales and rentals business may depend on visual exposure from major arterial routes, particularly for out-of-town customers.

Question 40

Industrial Site Considerations
Frontage

Answer 40

Frontage. An industrial site must have sufficient frontage for good building exposure and safe entry and exit points for truck and other vehicle traffic.

Transportation uses such as distribution warehouses will have frequent transport truck movements. Unimpeded separate entry and exit points with good sight lines will be desirable site attributes for these industrial uses.

Question 41

Industrial Site Considerations
Total Area

Answer 41

Total area. The area must be adequate not only to meet the require­ments of the building, landscaping, and parking, but also to serve surface (yard) storage, internal site transportation and access needs, and buffer requirements. Users contemplating expansion may require land to meet these future requirements.

Question 42

Industrial Site Considerations
Excess Land

Answer 42

Excess land.

Industrial improvements on large sites may represent an under-improvement of the site given the local trend in site coverage and floor space ratios. The starting point for a highest and best use (HBU) analysis “as improved” is to determine the amount of land required to support the existing industrial improvements.

Keep in mind that different industrial uses will have different site coverage requirements. For example, a property used strictly for warehousing may need only a relatively small area of land for efficient access to loading bays. A property converted to distribution warehousing use, with significant vehicular traffic on the site, will need substantially greater land requirements to accommodate tractor trailer storage. A HBU analysis may reveal one of several possible outcomes: (1) the additional land could not be easily developed and the HBU is yard storage; (2) the additional land could be developed and demand exists for additional industrial space at this location; or (3) the additional land could be subdivided and sold as a separate industrial site.

Question 43

The National Building Code (NBC) classifies industrial buildings in occupancy Group F, which has three divisions:

–List & Discuss–

Answer 43

The National Building Code (NBC) classifies industrial buildings in occupancy Group F, which has three divisions:

Division I (High Hazard): dry cleaning plants (employing flammable liquids), paint factories, warehouses for hazardous substances, distilleries, grain elevators

Division II (Medium Hazard): box factories; woodworking factories; repair garages; loft and warehouses containing largely combustible stores, cold storage plants, laboratories, printing plants; service stations; workshops and storage rooms; plants involving manufacture, use or storage of combustible goods not elsewhere classified; buildings with a fire load (see below) of more than 50 kilograms per square metre (10 pounds per square foot) and lower than a Division 1 Hazard

Division Ill (Low Hazard): creameries, salesrooms; factories, workshops, storage rooms using non-combustible materials; buildings with fire load of less than 50 kilograms per square metre (10 pounds per square foot)

Question 44

Fire hazard in a building is determined by _ _ _ _ _

Answer 44

Fire hazard in a building is determined by the type of occupancy, not by the type of construction.

Question 45

Fire Load

Answer 45

The fire load is the total amount of heat energy available in an occupancy divided by the area of the occupancy, expressed in pounds of combustibles per square foot. Buildings are designed to contain this fire load in case of fire.