– What you need to know to SELL your INDUSTRIAL property in Phoenix (Metro) Arizona

Tips on selling your industrial property

When you decide to sell your industrial property in Phoenix-metro (Scottsdale, Tempe, Chandler, Gilbert, Laveen, Goodyear, Etc.) it is extremely important to list it with a commercial real estate agent/broker (recommendation – Juan Pesqueira) that specializes in selling industrial properties. Industrial properties include: Warehouse/Distribution Buildings, Manufacturing Buildings (aka heavy industrial buildings), Refrigeration/Cold Storage Buildings, Telecom/Data Hosting Centers (aka Switching Centers, Cyber Centers, Web Hosting Facilities, Telecom Centers), Flex Buildings, Light Manufacturing Buildings, R&D Buildings, Showroom Buildings. Pretty much any type of property used for manufacturing, auto shops, warehouses, factories, storage, and research development.

Find a stellar real estate agent/broker

Many agents that sell industrial property only handle this type of commercial real estate. This is because there are many unique issues that apply only to industrial real estate. Therefore, you need to find the right real estate agent, broker, or company. If this is your 1st option you can forget about the rest, your real estate agent/broker/company of choice will handle the rest.

After reading this article, you will know why I (Juan Pesqueira, Realtor) should be on your short list of stellar real estate agents!

An important thing to think about before you sell your industrial property is that a new owner may want to use it for an entirely different purpose. Times are changing- the internet, technology and even people’s housing preferences have had a profound effect on these types of properties.

The experienced Industrial Property specialist should consider all of the following in their evaluation of pricing and marketability:

  • Comparable (comp) property values
  • Going market-rents for comparable properties
  • Location & Access
  • Floor plan
  • Services that are accessible to the property
  • Overall condition of the property
  • Any specialized function or modification to the property
  • Environmental issues (Phase I of Phase II)
  • Rent Roll

Location & Access

In Phoenix-Metro you need easy access to freeways, trains, or other shipping routes. They are very desirable not only for manufacturing but also warehousing and distribution. In fact, many large internet companies and smaller entrepreneurs are using facilities all over Arizona to distribute their online orders. Close proximity to shipping routes can add significant value to your property.

An auto shop or mechanic’s garage would also benefit from being close to freeways or on a major street such as Camelback, Scottsdale Rd, University and so forth.

Also consider truck access & parking

  • Is it easy for large trucks to access the property?
  • Are there loading docks to easily move cargo into the trucks?
  • Are their overhead doors on the side of the building so vehicles can enter the building directly?
  • How is the parking?
  • Is there parking INSIDE the building?- Many companies such as plumbers, cable companies etc. like to park their vehicles inside for security and maintenance.

These factors all affect the potential use and thus value of the Arizona property.

In some cases, your property may even be desirable as a home! In many urban areas such as Phoenix, Scottsdale, or Tempe, people are paying top dollar to convert charming old factories into lofts.

Floor Plan

Besides square footage, there are other important things to consider. Ceiling height is very valued today as users can stack their goods higher and make more efficient use of space. The focus being on cubic volume not square footage.

Column placement can also influence value as wide spacing makes it easier for forklifts to move about large buildings. A building with a “clear span” has no columns and can be highly prized.

It is also important to note the percentage of office space in the building. While 10 percent is typical, it can be as high as 50 percent for Research and Development buildings.


The electrical capacity and Internet capability are all important to consider. Many industries are extremely reliant on high amperage electricity being available.

Many industrial buildings are now being used exclusively to house computer servers. Easy access to Fiber optic, ISDN or T1/T3 data lines can be crucial. This can be a great use for a building that is in a remote or rural area not close to major shipping routes.

Overall Condition of the Property

It is important to be honest with your agent and any potential buyers about anything that you know might be wrong with the property.

You want to be sure you are setting yourself up for a smooth sale and try to avoid any problems in escrow that you could have avoided by full disclosure.

You do not want to get sued after close of escrow because you did not disclose something you knew about down the road. Today’s commercial real estate buyers are savvy, smart, well educated, and wealthy who have attorneys available/representing them. There is more lawsuit in commercial real estate than residential.

Specialized Function

The building may have large refrigeration units, HVAC, floor drains, hydraulic car lifts, or any number of other features suited to a specific type of owner/tenant. Discuss these with your broker as well. However, some of these specialized features such as floor drains can lead to environmental issues. Which brings us to the biggie: 

Industrial Real Estate Environmental Issues

Unfortunately, this can be a big deal when it comes time to sell your property. Industrial properties have the potential to cause environmental hazards which can affect not only the building itself but potentially the soil and even ground water beneath it. 

Former use of the building by users who may have disposed chemicals down drains or directly onto the property itself can pose many legal issues beyond just the sale of the property. In fact, the building across the street may have been the source of the contamination but you may be responsible for the clean up! 

In the litigious world we live in today, no financial institution/bank will finance an industrial property without first having the current owner pay for an environmental report. The reason for this is that under current law- not only is the owner responsible for cleanup but so is the lender should they foreclose on the property. This makes it a risky proposition for the lender as the cleanup can cost more than the value of the property held as collateral for the loan. (refer to overall conditions of the property for disclosure).

An environmental report is broken down into Phase I, Phase II, and Phase III inspections.

Phase I inspections

Phase I inspections are generally paid for entirely by you, the current owner. You may do this at the time of listing or wait until it is requested by the buyer’s lender. Some banks will only accept reports conducted by specific companies they have approved. Talk to your agent to find out what they feel is the best way to handle it.

In the United States, an environmental site assessment is a report prepared for a real estate holding that identifies potential or existing environmental contamination liabilities. … The Phase I ESA is generally considered the first step in the process of environmental due diligence… Wikipedia

Phase II inspections

Phase II inspections is the evaluation and testing of potential site impacts

Stakeholders want to reduce liability and future cleanup expenses on their investment by conducting a Phase II ESA, in which a subsurface investigation tests soil, soil gas and/or groundwater to identify sources of environmental impacts. The cost of this phase is usually split between the owner and the buyer however everything is always negotiable. Read more here.

Phase III inspections

Phase III inspections can be extremely costly. Phase III ESA’s, also known as Remediation Investigations/Feasibility Studies, are a necessary step in the environmental remediation process of environmental contaminants from a property. … Completing a Site Notification Report to notify regulatory bodies of site contamination. Click here to read more

You will have to devise a plan to either clean the property up or perhaps do nothing. At this point, you may have a problem selling the property at all. It all depends on the planned future use of the site. If the property is to be turned into housing it will need a much higher standard of clean up, then if it were to be a parking lot. Let us hope you do not get to this point!

One of my (Juan Pesqueira, Realtor) recent commercial/industrial sale was 4502 – 4506 S Central Ave, Phoenix, AZ. Aka as Larry’s Auto Service, an automotive shop on Central Avenue. I represented the seller. Luckily, the buyer paid cash but had he not. My seller would be forced to conduct at the minimum a phase 1 environmental test. No bank-financial institution will lend without it (Phase I, Phase II, Phase III) on file and to satisfactory. My seller disclosed everything about the property, how he kept his tanks, when/how he removed the oil, clean up, storage and so forth. He was upfront with the buyer. The buyer felt conferrable, trusted my seller, and we closed escrow.

Larry’s Auto Service on Central | 4502 – 4506 S Central Ave, Phoenix, AZ

Selling your industrial property investment in the Phoenix (metro) and purchasing another? Maybe you should consider a 1031 Exchange.

The current tax code provides for something called a 1031 Exchange which allows you to not pay capital gains taxes at the time of sale on your proceeds from the sale of your industrial or manufacturing property when you buy another investment property. 

This is also called a Tax Deferred Exchange because although you don’t pay taxes at the time of sale, you may in the future if you decide to “cash out” of your investment partially or all together.

A great feature of a 1031 exchange is that you do not have to buy another industrial building, you can buy just about any kind of income producing property or even multiple properties. For instance, you could buy an apartment, multiple rental homes, or a farm!

I advise anyone looking to do a 1031 in Phoenix Metro to hire/speak to an attorney and your accountants 1st.

– Juan Pesqueira, Realtor

As you can see, it takes unique skills and specialized knowledge to sell an industrial building.

Beyond just knowing the ins and outs of Industrial properties, Juan Pesqueira will also be able to promote the property and excite potential buyers through the use of great marketing. He will also be able to negotiate on your behalf and walk you through the complex paperwork that is involved in the transaction.

Your next step is to decide if you want to sell your property.  We invite you to do one of two things:

  1. Free Property Price and consultation. Have a confidential meeting with me to find out the price of your property in today’s market.  There is no charge for this service, and you are not obligated in any way to use our services.
  2. You can reach Juan Pesqueira – Attorneys Realty at 480.458.8007 (This cell does not have a voice message so if I dont pick up leave a detailed message), call my  office  480.767.6900 or shoot me an email: Pesqueira2@cox.net.

SOLD Industrial Property | JUAN PESQUEIRA

Just Listed

4334 – 4140 E WINSLOW AVE, Phoenix, AZ 85040 | and * SOLD * for FULL ASK in 16 days… Industrial building/warehouse! I-1/A-1 LIGHT INDUSTRIAL zoning allows for a variety of uses. The property is located just off University Dr. in Phoenix. Close to Tempe, Sky Harbor Airport, Phoenix metro, and all freeways. Comprised of 3 different parcels (124-49-049, 124-49-050, 124-49-051/4334 – 4340 – 4140 Winslow ave) totaling 24,869 sf / .57 +/-acre lot being sold as one. Fenced and secured. Highly traffic location, with easy access/exit for any business who operates in this location. The 3380 +/- building/ warehouse has 2.5 bathrooms, a reception and sitting area, private office, bay door and excellent potential for a variety of businesses.

SOLD in 9 months/98% from full asking price… Auto Mechanic/body shop building! Amazing hard to find C-3 zoning along Central Avenue. Comprised of 3 different parcels totaling 20,368 sf / .47-acre lot being sold as one. The 4900 +/- building, known as LARRY’s AUTO SERVICE has been a successful business for 40+ years. This Solid block old school auto mechanic/shop building has Central Avenue frontage of 180 feet +/-. Highly traffic location, with easy access/exit for any business who operates in this location. The building itself features 12 ft ceilings, wired with three phase electricity including air compressor. There are three single post inground lifts, three post twin inground lifts, fronted alignment rack, plus ample room for work benches and tool boxes. The shop entrance has a pull through, one sliding door (north side) and 10ft roll up door (south side). Access to both front and back locks through the shop or through both gates. Back lot has attached steel canopy covering three lifts. The shop also has a waiting room, public & private restroom, employee breakroom, compressor room, and office. The back office has separate entrance. The c3 zoning allows for many uses/developments. The current building is turnkey for a car repair shop business owner/end user + has 8 camera security system in place. It’s also an excellent opportunity for a rental income producer or for future development. The two lots to the south of the subject are owned by city of Phoenix in which have expressed they would like to sell. Drive by only – Do not disturb owner or business. SELLER WILLING TO CARRY!

HISTORY: The building was built in 1946, the Marshals purchased in 1988. Before owning the property, it was a transmission shop, Red Rooster bar, and Bashas grocery store.

BONUS: The South Central Light Rail Extension will travel in front of property.

I am Juan Pesqueira, Realtor who represent the mom and pop small business owners (the little guys)… so to every other agent, broker, or large company…

Have 55 minutes to spare? Below is AZRE Forum 2020: East Valley vs West Valley for your viewing and a good chat about commercial real estate in the East Valley to the far West Valley and what is poised to see the most new developments…

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