o you and the client have finished touring several suburban business parks and you begin the process of triaging the best sites for your client’s needs. The one consistent theme on the tours is the amount of time spent evaluating factors outside of the space versus how the interior layout worked. While the space itself may work for the “people portion” of the requirement, the underlying weak infrastructure of the office park can become the deal killer and thus the user selects another project. What used to be a decision based primarily upon economics and space needs now requires a matrix, discussed later in this column, to properly assess the best location.
Office parks must have the necessary technological infrastructure to support all the communications that go with the ever- increasing high- tech nature of today’s tenants. What used to be a client checklist comprising a quick snapshot of the economics and space attributes is now a multi- page document with a focus on one of the true drivers of the decision – the high cost of technology. If the office park does not meet this rigorous test, the prospect moves on to the next alternative.
Fiberoptic networks: Having at least two fiber providers in the park, not including the local exchange carrier, should be considered a competitive advantage for the office park. Such multiple providers provide the tenant with redundant connectivity. More importantly, by leveraging each network provider, the office tenant can substantially reduce its communications costs rather than be “captive” to what is usually the most expensive provider, i.e., the incumbent local exchange carrier.
Depending upon the prospective user’s data requirements, the savings can be thousands of dollars monthly. As an example, one client with a 3,000- sq.- ft. data center as part of its space targeted one office park with four fiber providers “in the street.” After a few rounds of negotiations, they estimated that they saved over $10,000 monthly on just their fiber usage. Office parks with only one carrier provide no negotiating leverage.
Redundant and readily accessible power, especially if that power comes from two separate utility grids, is an added benefit to an office park. Dual substation power is more significant if that park is dedicated to research and technology uses. Dual feed power many times is just not possible in many suburban markets. As such, dual feed power via two diverse routes into the park from a single substation is usually the best the tenant can hope for in most cases. With the user’s proliferation of blade servers and other condensed computer equipment, along with denser office layouts, the cooling requirements are continuing to stretch the power needs of many buildings’ original design. Discussion with the local utility can provide surprising insight as to the grid capacity and the utility infrastructure within the business park.
Security is always at the forefront of everyone’s mind. Tenants are already aware of the security within and around the premises, both in terms of employee safety and business secrets. Landlords for office parks that provide card key access, roaming patrols and 24/7 manned security should consider this cost as an ongoing necessity in this security- conscious world.
Additional emphasis should be given to the proximity of these office parks to risk factors not usually considered. Just some of the factors include commercial airport flight patterns, railroad rights of way, flood- prone areas and possible hazardous material generators. For example, being outside of the 100- year flood plain is not enough (since the 100- year flood seems to occur a little too often), so most companies now insist upon the site verifying whether it is outside of the 500- year plain. Such high- exposure areas can be compounded in case of an accident, because the emergency crews may require an evacuation of an area much larger than the accident site for an extended period of time.
Demographic analysis, once considered the primary decision driver for retailers, is now an important tool in site selection. Such critical factors include average individual/household wage and salary information; education level of the surrounding community; university/college/vocational and other training opportunities; cost of living index/tax rates/right to work states; and average drive times.
Demographic research on a site- by- site basis can uncover many interesting characteristics unique to the submarket. One client’s assessment of a metro area suggested that the total percentage of the college- educated labor force (a requirement of its new hire) was well below the national average. However, for competitive reasons, the company was only focusing on one submarket in that metro area. The demographics within the “average drive time” surrounding the office park revealed a college- educated work force nearly 11 percentage points higher than the national average – a convincing advantage for this community.
Tenants do focus on those business parks where you can “live, work and play.” Properly designed office parks are now offering “destination” amenities within the park such as signature restaurants, day care, fitness facilities and executive conferencing centers. We have seen some parks across the country grant land for local schools, community centers, sports fields and even YMCAs.
Architectural controls preserve the integrity of the park’s master plan. The client wants assurance from long- term ownership committed to adhering to that master plan and to avoiding any inappropriate uses. Overly restrictive controls in areas such as signage can be a detriment. At the same time, ownership committed to the tenant in terms of expansion (and contraction) needs can tip the scales in favor of one business park over another.
Let me make one important recommendation: The ownership should highlight these strengths in a well- documented (downloadable) brochure and on the Web site. While the office park’s fa?ade with representative lobbies and floor plans are welcome in an introductory brochure, the more detail in subsequent pages the better. No one should know the property better than the owner and its representative. The time should be invested to accurately assess the park’s infrastructure and document it. As site selection consultants, we will be verifying this information. Nevertheless, our clients are absolutely influenced by the perceived knowledge (or lack thereof) of the owner.
Site selection underwriting has increased three- fold over the past ten years. Other outside decision drivers unrelated to the facility itself now impact the process dramatically, such as economic incentives from state and local municipalities; competitive positioning of the business; business continuity and disaster recovery; operational risks; and quality of labor considerations.
We have developed a matrix that helps quantify over 50 different categories on a weighted average basis. The end result removes the “gut feel” of site selection and places a quantified total that the client can use to ascertain the best option for its business. The facility assessment may represent less than 20 percent of the matrix’s impact – the labor component and the overall costs of doing business tend to receive the most weight.
The corporation, the local employees and the business plan depend upon accurate and comprehensive site selection. Corporate real estate executives are committing to these office parks for the next ten years or more and need the assurance that they are making the correct long- term decision.
Michael Rareshide is executive vice president of Partners National Real Estate Group, a corporate real estate consulting firm exclusively representing tenants/space users across North America. Michael can be reached at michael bounce@pnre.com.