The Industrial Evolution, Part 1 of 2

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A good, basic Cost Approach course is an excellent early immersion in appraisal theory, particularly regarding types and subcategories of obsolescence. This isn’t that.

My purpose is to quickly point out what you might see most often in your (ad valorem related) day job regarding the concept of functional obsolescence in industrial space. Functional obsolescence (a lack of utility or desirability caused by a flaw in the structure, materials, or design) has two primary causes: Deficiency and Superadequacy.

Let’s talk about the industrial evolution… as seen through a local lens.

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Functional Obsolescence arising from Deficiency
You’ve seen these (usually) old factory and warehouse buildings your whole life. Now that you need to look at them professionally, you might look for…

Low ceiling height
Interior clear height for a range of industrial related processes (from machinery movement to warehousing pallet stacking) is functionally obsolete if insufficient according to today’s standards. Manufacturing building clear height requirements typically are now above 20 feet and can be much higher since the designs of these usually match a specific process. Distribution warehouses developed now commonly contain clear heights of 28 to 40 feet.

Machine pits and pads
Manufacturing machinery tends to be heavy, and floors need unique structural variation to accommodate this weight, thus facilities often are built with pits and pads. Since these pits and pads are nearly always originally built for a very specific process, they often limit the next occupant’s ability to function, and may need to be torn out.

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Narrow bay spacing
Machinery placement and product movement need space. Old style 20 foot bays are a minimum now, giving way to more recent 40 foot (and even greater) widths. The wider bays now found in newer distribution buildings are typically situated close to the dock doors to enhance forklift travel.

Part 2 of this post will continue the industrial evolution discussion.