26.05.2026
Industrial development site selection: the cost factors developers overlook
A site that looks viable on a residual appraisal can become unviable once the real cost of development is properly understood. When looking at industrial development cost management, these are the factors most commonly missed.
| Infrastructure, site preparation and external works typically account for around 15–25% of total industrial development costs on standard greenfield schemes. On constrained, remediation-heavy or brownfield sites, this can rise to 30–35%+ depending on abnormal costs, utility diversions and ground conditions.
Wakemans cost management data; BCIS construction benchmarks 2025 |
The UK industrial & logistics development market has seen extraordinary activity in recent years. Prime rents exceeding £11 per ft2 across key Midlands and South East markets, combined with strong institutional demand, have driven land values to levels that leave limited margin for cost surprises. In this environment, the quality of upfront cost analysis at the site selection stage has never mattered more.
Wakemans’ cost management team has worked on industrial and logistics schemes across the Midlands and beyond, from single-unit speculative developments to multi-phase, multi-contractor regeneration programmes. The following cost factors appear most frequently as sources of budget surprise, and they are all, in principle, assessable before a developer commits to a site.
Ground conditions and contamination
The cost of abnormals is the most common cause of failure in industrial development appraisals. A desk study identifies the obvious: former industrial use, made ground, and known contamination from public records. What it cannot tell you is the actual extent and type of contamination, the depth and bearing capacity of the ground, or the presence of obstructions that will affect foundation design. On a brownfield site, a thorough ground investigation is not a cost to be minimised; it is the most important piece of cost information available.
Utility infrastructure and power supply
The power supply requirements of modern logistics facilities, particularly those incorporating automation, EV charging, refrigeration, or data infrastructure, frequently exceed what is available from the nearest substation. The cost of power can vary drastically, from a simple LV connection up to a new primary substation or high-voltage cable run, which can add £100,000–£10m or more to a development, depending on distance from the network and the capacity required. These costs are site-specific and require early engagement with the relevant Distribution Network Operator. They are almost never reflected in standard build cost benchmarks.
The headline build cost per square foot is rarely the number that causes a development appraisal to fail. It is the abnormals — ground, utilities, infrastructure — that catch developers out.
Highway infrastructure and access
Logistics facilities generate significant HGV and car movement. LPAs increasingly require Section 278 highway improvements – junction upgrades, ghost islands, footway improvements, traffic signals – as conditions of planning consent. These costs are borne by the developer and can be substantial: a new roundabout or signalised junction on an A-road can cost £1m–£10m depending on specification and carriageway type. Understanding the highway authority’s likely requirements before submitting a planning application – ideally through pre-application engagement – allows those costs to be properly reflected in the land appraisal.
Sustainability requirements and BREEAM
Institutional investors and major occupiers increasingly require BREEAM Excellent or Outstanding accreditation for new industrial schemes. The Pets at Home distribution centre in Stafford, developed by Stoford and cost managed by Wakemans, which achieved BREEAM Excellent, incorporated solar panels, rainwater harvesting, 30 EV charging points, and extensive ecology works. The premium for a BREEAM Excellent specification over a standard base-build will vary significantly depending on the developer’s starting point. A developer already building to a high base specification — with strong fabric performance, generous roof loading for PV, and EV charging provision built into the base design — will face a far smaller uplift than one working from a leaner, cost-driven spec. What matters most is not the accreditation itself, but when in the design process the BREEAM target is set. Designed in from the outset, the cost impact is manageable; introduced as a late instruction to an already-tendered design, it can be significant.
Phasing and programme on multi-unit schemes
On larger multi-unit industrial parks, the phasing of infrastructure delivery – roads, drainage, landscaping, boundary treatment – has a direct impact on construction cost. Infrastructure installed in phase one that must be disturbed or extended in later phases generates abortive cost. A phasing strategy designed by an engineer in conjunction with a cost manager from the outset, rather than evolved reactively, consistently produces lower infrastructure costs across the full programme.
Wakemans’ cost management team provides site-specific cost appraisals for industrial developers at the feasibility and acquisition stage, drawing on benchmark data from projects including the Amazon Redditch Gateway, Pets at Home Stafford and multiple Indurent phases across the Midlands. Get in touch with us to find out how we can help you with cost advice and development appraisal support here.
