Power Is the First Conversation, Not the Last

The building looked right. Good bones, adequate square footage, reasonable ceiling height, loading dock in the right place, and a lease rate that worked for the pro forma. The operator signed a five-year lease, ordered the first CNC machine, and started planning the fit-out. Four weeks before equipment delivery, the electrician pulled the panel cover and delivered the news: 200-amp single-phase service. The machine required three-phase power and drew significantly more than the existing service could supply.

The landlord said it was not their problem. The utility company said the service upgrade would take four months and cost approximately $90,000. The CNC machine was already en route from the manufacturer with a non-refundable delivery charge. The operator was five years into a lease on a building that could not power their operation.

This is not a rare story in light industrial real estate. It repeats in variations across every market, every equipment type, and every operator category. The mechanism is always the same: electrical service is treated as something to verify after the lease is signed, at which point the options for addressing a deficiency are expensive and time-consuming.

Single-phase versus three-phase: why it matters

Most commercial buildings designed for office or retail use are served by single-phase power. Single-phase is adequate for lighting, HVAC, computers, and most office equipment. It is not adequate for most industrial production equipment.

Three-phase power provides the consistent rotating magnetic field that motors in industrial machinery require to operate efficiently and reliably. CNC machines, plasma cutters, large compressors, laser equipment, industrial HVAC chillers, refrigeration systems, and most production-grade equipment specify three-phase service. Running three-phase equipment on single-phase power requires a phase converter, which adds cost, reduces efficiency, voids most equipment warranties, and in some cases produces power quality problems that cause equipment damage over time.

Beyond the phase question, amperage determines how much equipment can run simultaneously. An operator who starts with one machine and grows to five needs the service capacity to run them concurrently. An undersized service that works for day one may not work for year two, which means the upgrade conversation happens under operational pressure rather than at the point where it could be planned for.

How electrical service gets upgraded — and why it takes so long

Service upgrades are not contractor decisions. They are utility decisions. The utility company — not your electrician, not your landlord, not your general contractor — determines whether upgraded service is available at your location, what it will cost, and when it can be delivered.

The process starts with an application to the utility for a service upgrade. The utility evaluates their existing infrastructure in the area: the transformer serving the building, the capacity of the distribution system feeding the transformer, and the distance from the nearest point where the requested service is available. If the existing transformer is undersized, they need to replace it. If the distribution system lacks three-phase conductors in the area, they need to extend them. These are capital infrastructure decisions made by the utility on their timeline, not yours.

Timeline for a service upgrade typically runs three to six months from application to energization. In some markets with constrained utility infrastructure or high demand for upgrades, the timeline is longer. The cost ranges from tens of thousands to several hundred thousand dollars depending on what infrastructure work is required, whether that cost is shared with the utility or borne entirely by the applicant, and what the tariff structure in the jurisdiction provides.

Landlords vary on how they handle service upgrade costs. Some treat it as a tenant improvement negotiation item. Others, particularly those with triple-net leases that put infrastructure costs on the tenant, take the position that the existing service is the existing service and what the tenant does with it is the tenant's problem. Understanding the lease terms on this point before signing is essential — not after.

What experienced industrial developers and operators do

The call to the utility happens before the letter of intent is signed. Not before closing, not during due diligence, before the LOI. The question is simple: what electrical service is currently available at this address, and what would it cost and take how long to upgrade to three-phase service at [required amperage]? The utility will tell you. Most will provide a written estimate. This information goes into the underwriting.

A site with adequate service is worth more than a site without it. A site that requires a six-month utility project before equipment can be installed is effectively off-limits for an operator with a near-term opening date, regardless of what the lease rate looks like. Sites with existing three-phase service at adequate amperage command premium rents in industrial markets precisely because the alternative — the service upgrade process — is painful enough that operators pay to avoid it.

For developers building light industrial from the ground up, electrical infrastructure is a pre-construction planning item. The right service for the intended use gets specified and ordered from the utility early in the development timeline, while schedule can still absorb the utility's lead time. Discovering at the end of construction that the service is inadequate is avoidable — but only if the conversation happened at the beginning.

The first conversation about a light industrial project should include the words "electrical service." Before the lease or the purchase agreement, before the floor plan, before the equipment order. The utility will tell you what you need to know. The cost of asking is zero. The cost of not asking can be six figures and several months of your life, in a building you are already contractually obligated to pay for.

Primus Companies builds light industrial facilities with infrastructure planned from the first design conversation — not discovered during construction. Visit primus-companies.com to talk through your project.