Evaluating Real Estate For Indoor Agriculture

March 17, 2021

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Traditionally, buyers of agricultural real estate have focused on rural land where primary considerations for their farm include things such as soil quality, annual rainfall amounts, and adequate drainage. Increasingly, however, agriculture start-ups are moving indoors. Compared to field-based agriculture, indoor farming allows for more crop cycles, less water usage, and the farms can be located closer to the consumer. The considerations for an indoor, or controlled environment agriculture (CEA) operation are considerably different than for outdoor farms. 

Assessing Potential Real Estate for CEA

Several factors need to be evaluated before purchasing or leasing a piece of real estate for CEA. Will you build new construction or rehabilitate a vacant building? Are you building a large-scale greenhouse or a small, urban vertical farm? 

Environment

Weather and terrain are important for natural light greenhouse projects. The primary limiting factor to crop production in a greenhouse is low light intensity during the winter so consult with an Ag-extension service or other resource to get that information for a proposed location. Adequate acreage is a must for not only the greenhouses themselves but, also shipping and receiving space, a retention pond (if needed), and potentially even worker housing.

Spacing

For a vertical or urban farm in an enclosed building, important factors to consider include adequate square footage to allow for proper spacing between growing systems and enough room to move the towers (if mobile) for cleaning or maintenance. Additionally, a building should have a sufficient water supply and potentially drainage, a robust HVAC system and humidity controls, and a ceiling which is high enough for the growing towers. Although indoor farms using high efficiency LED lighting, these systems, combined with pumps, humidifiers, and HVACs can use significant amounts of electricity, a developer should carefully and conservatively estimate those costs prior to negotiating those terms with a landlord or electric company. Finally, the farm should be in close enough proximity to allow for routine delivery to local customers, be they restaurants, groceries, farmers markets, or Community Supported Agriculture distributors.

Labor

In both types of farms, labor availability and cost is a critically important consideration. The cost of wages for urban farms, even for unskilled workers, will likely be higher than that of rural areas. And in the case of any real estate development, ensure prior coordination with relevant agencies has been done on permits, licenses, and zoning regulations prior to signing any leases or closing on a land contract. Prior to starting a search for a CEA project, it’s wise to seek expert help from outside consultants who can save an indoor farm developer time, money, and aggravation.

Tags real estate, indoor agriculture, cea