Posted by ray@lcorn on October 07, 2003 at 20:31:47:
If this is a deal, then it an option is the least costly way of controlling the property for a finite period of time. I say “if” because the price is ten times what typical undeveloped industrial land sells for in many markets. But you’re in CA, and I learned a long time ago you guys have a different rule book.
Assuming the price is in line with the market, then I would want an option for at least one year, with provisions for renewals. Industrial deals from scratch take a long time to put together, especially in an iffy economy.
As too fee, much depends on what you have in mind to find the end user. If you have one or more specific prospects in mind and are fairly certain of a deal, then you might feel better about a higher fee. As a practical matter I would try to let the seller name the price first. No matter what it is, offer less.
You’ll have to make up your own mind as to how high you are willing to go based on how sure you are of your ability to find the end user, or a developer for the end user. Much depends upon your experience level, contacts, and deal making ability in securing the end user.
If you don’t have experience in industrial deals and developpment, you might want to do some due diligence with the local economic development office as to the suitability and pricing of the deal. My guess is that they are aware of it if it is in fact a viable site. Most communities are finding prime industrial land becoming scarce, and seek to make the most of their current stock.