MSU Extension Product Center

Are you a food or beverage business owner that has outgrown your rental kitchen or current location? The Michigan State University Product Center recently sat down with Matt Franko, a commercial real estate professional, to gather some helpful tips on finding a new business location.

Franko is the owner and principal broker of The Valley City Group based in Grand Rapids, Michigan. He specializes in helping business owners find a new location. In addition to his real estate work, he also works as a strategic planning consultant and he and his wife own and operate Furniture City Creamery in Grand Rapids. Matt has over fifteen years of experience in commercial real estate and has helped numerous food and beverage businesses find a new location. He assists in finding both rental and owner-occupied spaces.

The following are some helpful tips for business owners looking for a new location:

1. Space: Before looking at new spaces, business owners need to have a good understanding of how much space they need. This includes the size of any new equipment, office space, storage, counter space, ventilation, refrigeration and freezer space. Do you need a loading dock or forklift to receive deliveries or ship your product? Owners also need to know how much space they will need for their employees and process steps. It is inefficient to secure a new location that will quickly become too small. Conversely, too large of a space could create a heavy financial burden on the business.
2. Utilities: Be sure to research and understand your utility needs and requirements. Does licensing require onsite pre-treatment of wastewater? Is a connection to a municipal water supply and/or sewer advantageous for operations? What kind of electrical amperage is needed and how many and what type of outlets will be needed for the equipment? Do your ovens need natural gas? What types of temperature control or humidity control will be needed? What are your ventilation and air handling needs?
3. Production location: Finding an existing commercial food processing facility can be challenging. Industrially zoned, white box properties can be easier to retrofit for food processing needs than many other options. These properties typically have adequate floor drains and electrical capacity; however, these spaces typically don’t work best if retail sales are desired, as these types of spaces are typically found in industrial parks.
4. Retail location: If a retail location is your goal, neighborhood business districts in up-and-coming areas can be a more affordable option over downtown locations in high rent districts. Do your homework to make sure your target audience lives or shops in the area you are targeting.
5. Time: Building out a space can take time, especially when municipal approvals are required. The approval process can take up to six months and sometimes longer, depending on licensing requirements. Be sure to allocate sufficient planning, approval time and budget toward a build out project.
6. Funding: If you are looking to purchase a building, prepare to have 10-15% of the cost upfront as a down payment. Some landlords will be willing to help fund the build-out of a space, the cost of which will be reimbursed over the term of the lease. For this type of an arrangement, most landlords will require a comprehensive business plan including financial information, sales projections and a credit check. Leasing out part of the building to another tenant can provide supplemental income. Market values are currently skewed high in some areas, so be sure to watch the market to observe trends to find the best deal. Be sure to secure multiple quotes to make sure you are securing the best possible pricing.
7. Landlord communication: If you are leasing, communication with landlords is critical. Landlords are looking to rent to successful businesses and business owners who are organized and professional. Taking phone calls and returning email messages from landlords should be a top priority if you want to secure a lease from them. Put in the effort to support a positive relationship with your landlord.
8. Finding a real estate agent or broker: When you are looking for a commercial broker or agent, find someone that can answer your questions and support your goals. An agent or broker that has food processing and manufacturing experience or food retail experience is recommended. If you are working with a broker that has experience only with office space, they may not have the knowledge base that is needed. Your agent/broker is there to represent you and your interests. Make sure they are showing you properties that are not just their own listings and that are a good fit for your needs.
9. Networking: Commercial brokers and agents can also connect you with lenders, construction professionals, architects and engineers that can assist with your project. You can also find connections through your professional networks, local neighborhood business organizations or Chamber of Commerce.

If you are interested in connecting with Matt Franko to find a commercial property or warehouse space in West Michigan, you can reach him via email at matt@vcg-re.com.  

For information on the food/beverage processing facility plan review process, learn more from the Michigan Department of Agriculture and Rural Development.

MSU Product Center

MSU Extension and the MSU Product Center assist entrepreneurs and businesses in developing products and services in the food and agriculture markets. Its team of experts consults with clients on a one-on-one basis, helping new entrepreneurs navigate from concept development to launch and beyond. The MSU Product Center also offers specialized services such as labeling, packaging, and nutritional analysis. If you are interested in business counseling from the MSU Product Center, please visit our website.

Reference to commercial products and trade names does not imply endorsement by MSU Extension or bias against those not mentioned.