# Industrial electrical capacity and utility upgrade diligence Canonical: https://chicagocommercialfunding.com/guides/industrial-electrical-capacity-and-utility-upgrade-diligence/ Markdown: https://chicagocommercialfunding.com/guides/industrial-electrical-capacity-and-utility-upgrade-diligence/index.md Resource ID: industrial-electrical-capacity-and-utility-upgrade-diligence Published: 2026-10-21 Updated: 2026-10-21 Attribution: Chicago Commercial Funding Editorial Topic: industrial Asset types: Industrial Investment stage: Evaluate Experience level: Intermediate Verify usable electrical capacity, utility delivery, installation cost, and energization timing before underwriting a power-dependent industrial tenant. An industrial investor should verify the power a tenant can actually use, the cost and timing of any upgrade, and who is obligated to pay. A large service label, visible transformer, or broker statement about “heavy power” does not establish that the property can support a proposed operation. A power-dependent leasing thesis should remain conditional until qualified electrical professionals and the serving utility have addressed the actual load. This article presents an investment investigation framework, not an electrical design or a statement that a particular service size suits a particular business. ## Translate the tenant's operation into a load question Ask the tenant for a proposed equipment schedule, operating hours, simultaneous usage, starting characteristics, future expansion, and any process requiring unusually reliable service. Distinguish equipment nameplate totals from an engineered demand analysis. An investor should not add numbers from a brochure and treat the result as a service design. The tenant may require a particular voltage, phase, power quality, redundancy, or distribution arrangement. Space heating, refrigeration, vehicle charging, production equipment, lighting, and office loads may interact. Equipment that fits on the floor plan can still be impractical to serve electrically. Include a process engineer or electrical engineer early enough to identify nonnegotiable requirements. A tenant's electrician may understand its current operation but still need coordination with the building engineer, utility, landlord, and permitting authority. Record who is responsible for producing the final design and verifying suitability. The City of Chicago publishes its construction-code framework, including electrical provisions. For Chicago properties, use that official starting point and confirm current requirements for the proposed work. A suburban building requires the relevant local authority's requirements. [Chicago Construction Codes](https://chicago.gov/city/en/depts/bldgs/provdrs/bldg_code/svcs/chicago_buildingcodeonline.html) ## Separate four different kinds of capacity A diligence file should distinguish utility delivery to the site, the service equipment, distribution within the building, and usable capacity at the tenant's proposed equipment location. A limitation at any point can prevent the operation. Existing service documents may describe equipment ratings rather than available utility capacity. Existing bills show historical consumption, which may be much lower than the proposed operation. An unused panel position does not prove the upstream system can supply the added load. Ask the appropriate professionals to reconcile the one-line diagram, equipment labels, physical condition, metering, and historical usage. Locate utility-owned and customer-owned equipment. Determine whether an upgrade requires work on one side of the ownership boundary or both. When evaluating an occupied property, identify capacity contractually committed to other tenants. Vacant space may look available because a current tenant is temporarily idle. Future operations must be compatible with existing obligations, not merely with conditions observed on the inspection day. ## Build a document request that answers the investment question Request existing electrical drawings, permitted alteration records, service agreements available to the owner, bills, interval data where available, maintenance history, studies, and reports of outages or equipment failures. Obtain the tenant's installation documents and ownership records for specialized equipment. Ask whether earlier upgrades received final approvals. Chicago's public building-records service is useful for locating permits and inspections, but its agreement disclaims completeness and accuracy. Use records to identify follow-up questions, not to certify the condition of the electrical system. [Chicago building records](https://webapps1.chicago.gov/buildingrecords/) Inspect visible equipment through qualified professionals. Ask about obsolete components, replacement availability, water intrusion, access, clearances, grounding, and future maintenance. A service upgrade can reveal a separate need to replace distribution equipment that the acquisition model treated as reusable. Keep unresolved questions in a decision log. “Seller to provide” is not a finding. Specify the unanswered question, evidence needed, responsible party, deadline, and effect on price or closing. An upgrade estimate based on incomplete scope should have a clearly identified uncertainty allowance rather than being treated as a fixed bid. ## Ask the utility the right question Present the actual proposed load and timeline. A vague inquiry about whether the area has power may produce a general answer that does not address the property. The utility may need a formal application, engineering review, easements, equipment procurement, or system work before giving a reliable delivery schedule. Confirm what a preliminary statement does and does not commit to. Identify whether capacity is reserved, whether a quote expires, whether deposits are refundable, and whether changes in load restart the review. Do not describe preliminary utility feedback as a guaranteed energization date. The necessary work may extend beyond the parcel. New easements, adjacent work, road openings, or coordination with other infrastructure can create cost and schedule exposure. The investor should ask the project team to identify these dependencies rather than assuming every issue can be solved by replacing a panel. Obtain written milestone assumptions. An equipment delivery estimate, permit approval, completed installation, inspection, meter installation, and energization are different events. Tie rent commencement and loan deadlines to realistic project milestones. ComEd’s publicly hosted 2024 application illustrates why service review requires project-specific information: it separates connected and diversified loads, requests equipment information, and identifies site readiness and off-site work as scheduling factors. It is a historical process example, not a promise of current capacity or timing. Confirm the current application and requirements with the serving utility. [ComEd service application, 2024](https://www.comed.com/SiteCollectionDocuments/MyAccount/MyService/ServiceAppCommercialIndustrial.pdf) ## A hypothetical upgrade model Assume an investor can lease a vacant industrial unit for $120,000 annually if a proposed production tenant receives suitable service. The current vacant-unit carrying cost is $30,000 annually. The illustrative electrical project has four components: | Hypothetical component | Cost | |---|---:| | Utility-related work and connection | $80,000 | | Customer-owned service and distribution | $95,000 | | Engineering, permitting, and testing | $20,000 | | Contingency | $35,000 | | Total electrical capital | $230,000 | A six-month delay creates $15,000 of carrying expense and postpones $60,000 of base rent. If the model had assumed immediate rent, the first-year difference is $75,000 before financing and other expenses. The required funding is not just the $230,000 construction budget; it includes the timing of operations and any debt-service shortfall. Suppose a tenant offers to pay $100,000 toward the upgrade. Determine when that money arrives. A reimbursement after opening does not fund deposits due now. Model whether the landlord's contribution is capitalized into rent, reimbursed as a separate payment, or simply an unrecovered leasing cost. The electrical project's $230,000 divided by the proposed $120,000 annual rent equals 1.92 years of gross base rent. That simple ratio is not a return calculation because operating expenses, downtime, leasing risk, and residual utility still matter. It does show that the improvement is material enough to require tenant-credit analysis. ## Allocate risk before signing the lease Document the scope each party must deliver, the tenant's required specifications, approval rights, payment timing, change orders, and the consequences of delay. Counsel should align the lease with construction and utility documents. A lease saying the landlord will provide “adequate power” without a defined standard can leave the investor with a large dispute. Decide who owns the new equipment and who maintains it. Identify what stays at lease expiration and whether it is reusable by another tenant. The landlord may reasonably value broadly useful capacity differently from tenant-specific process distribution. Address load changes. If the tenant later changes its operation, determine whether consent, engineering review, additional payment, or other conditions apply. The model should not assume an initial contribution covers every future tenant requirement. Ask about interruption and business-income exposure. Electrical failure can harm both property cash flow and the tenant's business. Review insurance with the broker and confirm the actual lease allocation rather than assuming either policy covers every outage or equipment failure. ## Connect the upgrade to lender and exit assumptions A lender may treat an uncompleted power upgrade as an unresolved leasing condition and withhold funding or require reserves. Present the scope, budget, timeline, tenant obligations, and fallback use. Do not underwrite permanent proceeds solely from rent that cannot commence until a critical improvement is complete. Ask whether the proposed power project improves the building's residual competitiveness or merely makes one tenant's business possible. The acquisition model should identify which investment can serve a future occupier and which spending is specific to this operation. For exit analysis, obtain evidence that future tenants value the installed capacity. A specialized service can be expensive yet add little resale value if nearby demand does not need it. Conversely, documented, usable capacity can eliminate a significant obstacle for a future occupier. Avoid automatically adding project cost dollar for dollar to property value. ## Distinguish capacity from operating cost A confirmed electrical service can support the equipment while still producing an occupancy cost the tenant cannot afford. Ask the tenant and its advisers to evaluate actual rate structure, demand characteristics, operating hours, and expected usage through the serving provider's current information. The investor should understand whether rent affordability depends on an energy-cost assumption. Do not turn an adequate service into evidence of low operating expense; those are separate findings with different sources and consequences. ## Decide with a fallback case Underwrite three outcomes: the service is confirmed and delivered on time, it is delivered late or at higher cost, and the proposed tenant cannot operate there. For the third case, estimate alternative rent, the next tenant pool, and whether project spending can be recovered or repurposed. Proceed only if the investment has enough capital and contractual clarity to survive the credible downside. Reprice when the power issue can be solved but reduces returns. Reject a deal when the price requires immediate rent from an operation whose critical utility needs remain unverified. ## Source registry - [City of Chicago: Chicago Construction Codes](https://chicago.gov/city/en/depts/bldgs/provdrs/bldg_code/svcs/chicago_buildingcodeonline.html): accessed 2026-10-21 - [City of Chicago: Building Permit and Inspection Records](https://webapps1.chicago.gov/buildingrecords/): accessed 2026-10-21 - [ComEd — 2024 service application and commercial/industrial load information (historical process example)](https://www.comed.com/SiteCollectionDocuments/MyAccount/MyService/ServiceAppCommercialIndustrial.pdf): accessed 2026-10-21 ## Related resources - [A Chicago investor’s guide to industrial property investment](https://chicagocommercialfunding.com/learn/industrial/) - [Industrial environmental history and lender diligence](https://chicagocommercialfunding.com/guides/industrial-environmental-history-and-lender-diligence/) - [Clear height column spacing and functional industrial demand](https://chicagocommercialfunding.com/guides/clear-height-column-spacing-and-functional-industrial-demand/)