Industrial Land Value Optimization
Industrial Land Value Optimization (ILVO) introduces a new framework for the development of industrial properties, enhancing their sale and lease value to buyers and tenants. This approach inserts sustainable logistics and market access at the center of property design. By conceiving of each property as a prosperous component of a modern Silk Road*, ILVO expands the value of industrial land.
- The Silk Road was an ancient trade route linking China with the West, carrying goods and ideas between the two great civilizations of Rome and China.
In the 21st century, land use choices must address the full impacts of:
- the industrial activities at each property,
- the broader industrial systems in which these activities occur, and
- moving material, goods, and workers to and from each site.
This redefines the concept of “highest and best use.” Currently, this guiding principle of real estate development constricts attention to a site’s maximum coverage, density, height, and income, with little regard for the impact of supply chains and logistics. In fact, in most cases, the implications of moving material and people to and from a property are greater than what occurs at the property.
ILVO synthesizes multiple freight market databases to illuminate the supply chains that originate, terminate, and pass through a property’s region. This understanding enables land developers and realtors to target buyers or tenants who would most appreciate the property's logistics value. Knowing the supply chains that a property can serve by rail boosts the volume and viability of services that can be provided at that site and enables shippers to access a larger marketplace for material supply and product distribution.
Land is no longer so plentiful in North America that we can afford to use it unwisely. While widely practiced in transit-oriented development, land use planning is rarely applied to catalyze sustainable freight-oriented development. Yet optimizing a property’s use of highways and rail lines boosts its land value and advances many public-sector objectives.
What sensible land-use approaches should North America embrace?
- Create corridor rail development and operating plans
- Co-locate utility and transportation corridors
- Co-locate passenger and freight rail lines
- Support developers in creating sustainable logistics plans
- Offer property tax benefits to land developers to incentivize rail use
- Preserve land along rail rights-of-way for rail-served development
In the same way that communities preserve land along scenic lakefronts for low-impact, non-industrial uses, land adjacent to rail lines should be used as much as possible for rail-served industrial activities. As the continent embarks on facilitating the rail service expansion envisioned in CAPSI, it must recognize that Industrial Land Value Optimization is critical to attracting private-sector investment capital in sustainable industrial systems.
