Top 5 Overlooked Red Flags in Site Due Diligence

Even sites that appear “perfect” can conceal problems that stall projects. Critical obstacles often remain out of sight until a deeper level of due diligence begins. Site Selection Group, a full-service location advisory, economic incentives, and real estate services firm, understands the importance of identifying these red flags early to prevent costly delays and project setbacks. Below are five of the most common red flags in site due diligence, along with practical steps to uncover them before final decisions are made.

1. Industrial Utility Capacity vs. Availability

The Issue

Utility lines on a map do not guarantee deliverable capacity. Infrastructure nearby does not guarantee service capacity.

Real-World Impact

Projects sometimes advance based on the assumption that nearby infrastructure is ready to serve new demand. In reality, companies may discover that electric substation capacity is exhausted, transformer lead times stretch well beyond the construction schedule, or wastewater treatment plants are already operating near permit limits. Each of these findings can add years of delay and millions in unplanned costs, putting entire projects at risk.

Best Practice

It is important to confirm capacity at the connection point, distribution point, and source point while evaluating site or building options. It is also ideal to confirm what improvements might be needed to provide this service. If an extension is required, inquiries should be made about whether rights of way are in place or need to be acquired. Right-of-way acquisition can easily derail the viability of a site since it requires the acquisition of private property. Finally, confirm whose responsibility it is to complete and pay for upgrades and account for equipment lead times in your schedule. Eventually, it will be important to secure commitment letters from utilities that confirm available capacity, interconnection points, and delivery timelines. This can be done prior to signing a service contract.

2. Industrial Zoning and Permitting Pitfalls

The Issue

“Industrial zoning” can be misleading, as projects may still face permits, reviews, hearings, and hidden restrictions.

Real-World Impact

Companies frequently underestimate the complexity of local zoning codes. A site may require additional permits, extended public hearings, or design changes for screening, buffers, or architectural standards. These processes often stretch project timelines by six months or more and can provide an opportunity for public opposition. For highly competitive projects, delays of this length can result in lost opportunities, budget overruns, or missed production windows.

Best Practice

Carefully review ordinances to confirm that the intended use is permitted under the current zoning classification. If rezoning or interpretation is needed, request a letter from the zoning authority confirming the correct classification and outlining each required approval, meeting, or hearing, along with the estimated timeline. Prioritize properties that are already zoned appropriately to minimize risk. Confirm how restrictions are measured (e.g., where height is measured from, or how noise and odor limits are applied) as those details can materially impact design. Finally, review any future land use or regulatory plans that may affect approval down the line. A clear, documented permitting path is as critical as the land itself.

3. Land Use Conflicts

The Issue

Proximity to residential subdivisions, schools, or sensitive natural areas can generate opposition once public notices are posted.

Real-World Impact

Industrial projects often face opposition from neighbors concerned about noise, traffic, or emissions. Even when technically feasible and zoned correctly, proximity to schools, cemeteries, or homes can trigger public resistance during hearings. Projects near conservation areas, wetlands, or protected habitats also face added regulatory scrutiny, extending timelines and requiring costly mitigation. In some cases, community or environmental objections sway local officials, leading to rejection of otherwise viable projects.

Best Practice

When assessing a property, start by reviewing aerial imagery and nearby land uses to understand the surrounding context. Anticipate not only technical barriers but also where political or community pressure is likely to surface. Avoid locations that are too close to sensitive areas such as schools, neighborhoods, or conservation areas, if possible. If avoidance is not feasible, design with additional buffers such as preserving tree stands or creating expanded setbacks. Identify likely issues early, such as traffic, noise, or emissions, and develop strategies to address them before they become obstacles. Projects that engage the community early and show thoughtful consideration of local concerns are far more likely to build trust and succeed.

4. Subsurface and Environmental Site Assessment Risks

The Issue

Poor soils, shallow rock, or contamination can quickly undermine a property’s cost advantage, and these risks are rarely disclosed in early marketing materials.

Real-World Impact

It is common for geotechnical testing to reveal unexpected soil conditions, shallow groundwater, or shallow bedrock that require expensive foundation work. Environmental assessments may identify old storage tanks, fill material, or contamination from prior industrial use. Each can increase site preparation costs and delay construction starts.

Best Practice

Require recent geotechnical borings and a Phase I Environmental Site Assessment early in evaluation. If they recommend additional study, complete it before committing capital. Consider Phase II assessments or groundwater testing if there are indications of prior industrial activity. This diligence ensures accurate cost forecasting and reduces the risk of encountering major construction delays or budget overruns.

5. Environmental and Land Resource Constraints

The Issue

Not all parcel acreage is usable. Floodplains, wetlands, cemeteries, cultural sites, and protected habitats can restrict development. 

Real-World Impact

A site marketed as fully developable may lose a large portion of usable land once wetland delineation, floodplain mapping, or endangered species compliance reviews are complete. Construction plans may require redesign, buffer zones, or costly mitigation. In some cases, cultural resource surveys uncover cemeteries or historically significant landmarks that must be preserved. Each of these findings can delay reviews for months or years, add permitting complexity, and significantly increase costs for both developers and communities.

Best Practice

Conduct thorough desktop reviews before committing to site visits. Cross-reference FEMA flood maps, the U.S. Fish and Wildlife Service’s endangered species database, the National Wetlands Inventory, and state or local cultural resource records. Commission professional wetland delineations, floodplain mapping, and cultural resource surveys early in the process to confirm potential impacts. Identifying these constraints upfront allows companies to assess true usable acreage, estimate mitigation costs, and plan schedules with greater certainty.

Conclusion

Industrial site selection is largely about reducing the risk of the unknown. While no property is risk-free, addressing these red flags early can save millions in costs and months or years in delays. Communities that invest in preparation build confidence with investors. Companies that push for deeper due diligence protect themselves from costly setbacks. Success depends on more than a checklist. It requires asking the right questions before the contract is signed. Contact Site Selection Group to ensure your project does not fall victim to one or more of these red flags.