I had originally titled this post in our series, Commercial Vegetable Greenhouse: Starting from Square One, “Land,” boring I know but to the point. After thinking about who our customers are and where growers are wanting to build their greenhouses, I changed it to the title “Growing Location”. Yes, another blockbuster title. The traditional thinking behind planning your greenhouse location was based on the market location the plant material was being sold into but with the thought of being on the outskirts of the community, where land is typically more inexpensive. This approach also gave the opportunity for the community to expand out around the growing location and eventually a profit could be made by selling the property, now that the value has risen, and moving the operation further out. Recently this thinking has been curbed due to the housing market downturn, to some extent, but more importantly because growers are finding that being in and connected to the community leads to higher customer interaction, branding and awareness. More and more consumers are wanting to know who grows their food and how it is grown. What better way than to be in the community that supports you.
Not all greenhouse operators are the same. Some are looking at the greenhouse as a factory and location doesn’t have the same weight as a niche grower supported by the local community interactions. Neither are wrong as long as it follows your plan and objectives.
In this post I will raise the questions that you, the grower, need to answer in regards to finding the ideal location to build a commercial vegetable greenhouse. This is not an easy task. There will be give and take when looking at cost vs needs.
Spend some time looking at your plans and objectives and put together a list of needs and wants together that encompass everything you want your greenhouse location to have. Write everything down and try to think of it as your ideal location.
- What is your ideal location, size and setting?
- Has useable existing building(s)?
- Functionality/flow of property?
- Future plans/expansion?
- Rank the above list by importance, example rank system below.
- Must haves
- Water, electricity, road access etc.
- Ag or correct zoning for your business
- Enough square footage to reach your business goals
- Distance from preferred city area
- Square/rectangle property vs “L” or other shape
- Frontage road exposure
- Space to expand
- First to give on the give and take list
- Distance from neighboring buildings
- Overall feel when on the property
- Must haves
This list will be lengthy. Once you have a revised and ranked list you can now start looking for properties. With the list in hand it will be easier to assess the properties by knowing what you can and can’t accept.
There are also costs associated to each of the line items in the above list. Do some research and get an idea of what these costs may be. As you work through the list at a potential property you will be able to keep track of the cost. There is the cost of the existing, as is, property, then there are the costs of renovating the property for your business.
- Example costs:
- Parking lot resurfacing
- Running utilities to a plot of land
- Cost of changing zoning (if possible)
Very rarely will a property be available that is move-in ready for your business. The land maybe in the right location but will need a fair amount of grading or the property has many of the things you need but is a bit too far from your ideal location in the community. This is where your business needs and wants will need to be graded against the list of properties and your budget.
This is the difficult place to give specific answers. Each commercial grower and business is different. Each are going after different markets, using different growing methods, selling or offering product in different ways, which makes giving examples not as effective, but I’ll try to give the best one I can.
Example of a Grower Looking for a Growing Location:
Context: Urban Greens Farm (UGF) has out grown their backyard operation and are looking for a commercial site. They mainly grow leafy greens with some herbs as well. Their experience is in NFT but are looking to expand into deep water culture. Their target market are the younger professionals that are moving back into the city, 25-45 yrs. old, with the income and passion to support a local grower. Mainly they want to expand on their CSA program and fresh delivery service. Plans also include servicing independent urban restaurants. They have determined that they will need 6000 sqft of greenhouse space for immediate sales and another 6000 sqft with-in the next 3-6 months to grow into. The final planning phase includes another expansion of 12,000 sqft to be needed with-in 12-14 months. UGF is a growth oriented company and has plans beyond the first 2 years to expand size and market reach. The first two 6000 sqft phases will be built at the same time. Besides the planned 24k sqft of greenhouse, there needs to be a 2500 sqft head house/packing house with truck dock, room for 5-10 car parking and semi-truck access. This is roughly an acre footprint but more is ideal. They want to be in the city limits and as close to the urban core as possible. On their list of wants is for the property to be visually attractive and inviting. Part of their marketing plan is to have events at and tours of the greenhouse.
Three potential properties they are looking at:
- Urban Lot:
This location comes in at ¾ of an acre, over budget by 15%, minimal grading and site prep needed but is completely blank. No buildings or infrastructure. Utilities are close as it is on a main downtown street. The property is in an up and coming part of the city and filling with their target market. There is adequate access for trucks, customers and employees. The lot is surrounded by 4 and 5 story buildings. The site is zoned commercial.
- Suburban Neighborhood:
Property 2 is in a residential neighborhood. It is an older area with room to possibly expand behind the existing for sale lot. The lot size is 1 ½ acres with a small, 2500 sqft building. It was previously used as a small convenience store. Parking and truck access are good. The lot is 20-30 minutes from their predetermined target market. Utilities are close and the lot is flat with very little grading and prep work needed. The site is zoned commercial.
- Outskirts of City:
Site three is 4 acres, raw land without utilities close by, no infrastructure. The plot of land is full of trees and will need extensive grading and dirt work. The site is big enough to design the property exactly how they want it laid out. The property is 45 minutes from their target market. The site is zoned for agriculture. A main highway runs past the property but doesn’t exit directly to it. The price of the land is 2/3 of their budgeted land expense.
Side Note: The property descriptions above do not cover all factors needed to make a true decision but are merely an example of how the decision process will play out.
Let’s take a look at how the 3 properties compare to what UGF had planned. Comparing cost of land, infrastructure and market to narrow the options to one that makes the most sense for their business, again will be a give and take situation. Below is a list that each property can be graded against and listed with costs that will be incurred to have each performed if needed.
- Accessibility – Can semi-trucks get to the property? If it is a retail operation, can they easily get to the location?
- Location/proximity to market
- Utilities – Is there gas, water and electricity available? What is the cost of getting them installed vs. looking at a different location?
- Future Expansions – Is there enough room to expand as your business grows?
- Amount of grading to be done – Do the site preparations outweigh the cost of the land? Is there a better location with less prep work?
- Building Codes – What codes are in place and can the greenhouse be approved?
- Communications availability (phone, internet, cell reception)
- Is there room for parking, head house/packing house, and other out buildings that may be needed?
How each property compares to UGF’s plans and each other:
This location comes in at ¾ of an acre, on budget, minimal grading and site prep needed but is completely blank. No buildings or infrastructure. Utilities are close as it is on a main downtown street. The property is in an up and coming part of the city and filling with their target market. There is adequate access for trucks, customers and employees. The lot is surrounded by 4 and 5 story buildings. The site is zoned commercial.
This is an ideal location. The curb appeal they are looking for, proximity to target market and site prep are all almost perfect. The biggest detractor is the lot size. It will be a tight squeeze for phases 1, 2 and 3 with no room beyond these. If this property is chosen, a second site will be needed when they want to expand. Second it is over budget. The first two greenhouses that were planned to be built at the same time will need to be split up. The second being built when the first one is generating revenue. Available natural light is low due to surrounding buildings and artificial lights will need to be added to compensate. Research has been done on changing the zoning to match their business and is possible but will take 2-3 months to get processed. Along with the zoning, building permits for greenhouses will take extra time to get processed. This will be a first time in this city a project like this will be done.
Property 2 is in a residential neighborhood but backed up to undisturbed land. It is an older area with room to possibly expand behind the property. The lot size is 1 ½ acres with a small, 2500 sqft building. It was previously used as a small convenience store. Parking and truck access are good. The lot is 20-25 minutes from their predetermined target market. Utilities are close and the lot is flat with very little grading and prep work needed. The site is zoned commercial. The lot price is within their budget.
Although site 2 is far from their target market it has plenty of room for initial planned phases and as of now has land available for expansions behind. The existing building can be used as the packing/head house which will reduce some of the building costs. The zoning change needed is up in the air. UGF has been going to neighborhood and city council meetings and not very many people are wanting a commercial greenhouse as neighbors. If they are able to build at this location efforts and costs of reaching their target market will be increased due to proximity.
Outskirts of City:
Site three is 4 acres, raw land without utilities close by, no infrastructure. The plot of land is full of trees and will need extensive grading and dirt work. The site is big enough to design the property exactly how they want it laid out. The property is 45 minutes from their target market. The site is zoned for agriculture. A main highway runs past the property but doesn’t exit directly to it. The price of the land is ½ of their budgeted land expense.
Site three is like the wild west. It is zoned to meet their needs. Building codes are not a hindrance. Neighbors are non-existent and growing conditions are ideal. Although the land is by far the cheapest, between clearing the land, grading & dirt work and getting utilities run to the property, the overall cost is on budget. This is for 4 acres prepped and not the planned 1 acre. There is a big disconnect between the target market and this location. The approach and interactions to engage customers will be different than planned.
Here is the cinematic end no one wants to see, a non-decision in an epic boxing bout. Up to this point I can’t pick a property because the full picture isn’t created. Which is ironic being that I am writing this. A lot more is needed to be researched and debated before a true decision is made.
- Do they, UGF, want to put in the effort of buying site 1 and then doing it again in 2-3 years?
- Do they want to make the trip to site 3 every day and in the middle of the night when sensors are saying the growing system is not right?
- Will the fight, with neighbors and city council, be too much to hassle with when looking at site 2?
- The time line for site 1 will be pushed out at least 2-3 months and potentially longer due to zoning and building codes. What will the effect be on their already expanding business be?
- In the, not planned, outcome of having to close the business at some point, which location is better for resale?
- If budgets are tight initially will taxes and insurance in the city and suburbia be too much to handle?
- If they take on the higher taxes, insurance and overall operating costs, where will they make adjustments to compensate? Taking on more money will raise their debt load or dilute the ownership.
- Will it be difficult to find labor for any or all locations?
One of the biggest takeaways I want to impart is, the entire picture has to be drawn before decisions can be made. Everything is tied together and when one part is changed it can ripple down and effect one or more other aspects of the project i.e. location of greenhouse in proximity to target market. Budgets and plans will have to be changed if the location is different than what the budgets and plans were based on. On the fly or in the moment decisions will come up and have to be made but you want all the information at your fingertips when it comes time to make the decision. Knowing the effect a decision has on the entire project safeguards you from blindly making decisions and having the outcome blow up in the future.