ompanies seeking sites typically use similar lists of criteria. It’s the ranking of the criteria that varies, depending on the type of company and management’s priorities.
While the preferred alternatives are historically stable, they are now changing rapidly, and an ideal location today may not be ideal tomorrow due to changing markets and globalization, and as the composition and age of the workforce evolves.
Of increasing importance are environmentally friendly green buildings, especially for major companies. Sustainable development is becoming a priority with many companies, to the extent that corporate users are increasingly willing to incur additional upfront costs if necessary as an investment in an energy efficient facility providing a healthier working environment.
Another trend challenging major users is the dynamic of community and governmental support. Community acceptance of a proposed facility may be tempered by its impacts (actual or perceived). In the past a community would welcome a new company, based on the prospect of new jobs and economic growth. Today a major facility may face community objections to traffic, noise, and anticipated strain on infrastructure. Even existing operations may encounter opposition to planned expansion. It may not be enough to acquire a large enough site to accommodate future growth. Obtaining upfront approvals for future expansion is advisable.
In these cases, support of local officials and staff, and the strength of that support will be important, as is the support of key community influencers (e.g. local newspapers, business and community leaders).
A related issue is the assurance of delivery of a site or facility, often tied to zoning and the regulatory process required to achieve the appropriate zoning and obtain permits. Companies that have faced months or even years of pre-development time and expense would have much preferred identification of these obstacles during the site selection process.
In our experience an incentives award is seldom the driver, but can be a tie breaker.
Our colleague John Krug, Development Advisors, Inc. vice president, noted that the priorities of companies considering locations are not incentives, but rather “is there space available, and if so, where, and when can we occupy?”
A former
Metro Orlando Economic Development Commission executive, Krug said, “Many companies are lured by incentives. They have their place, but incentives don’t make a bad location better.”
The factors contributing to a good location decision center on identifying and ranking the criteria for the particular company. In some cases, it is one primary factor that outweighs the others in a location decision.
Westinghouse Power Generation and Hewitt Associates, major companies each with a long-established Orlando area presence, have been successful in locating near the University of Central Florida, key to their goals of proximity to students, engineers and research and training opportunities. The corporate headquarters of Siemens Power Generation is in the Quadrangle business park just outside the UCF campus, and the 1,000+ acre Central Florida Research Park adjacent to the university is home to human resources services giant Hewitt Associates.
A recent Central Florida site selection by Baer’s Furniture was primarily based on the shortest drive time from the warehouse distribution site to its area retail stores. The result was the least cost solution in an industry in which real estate is a relatively minor cost compared to the cost of the total supply chain. The location also aids Baer’s work-force training requirements,
manufacturing, but higher
ranking factors tend to be
low-cost land and work force.
which can be addressed by nearby Polk Community College Corporate College.
United Natural Foods, Inc. recently selected a Sarasota, Florida distribution facility that fulfilled the wholesale distributor’s primary goals of speed of delivery to its customers and reduction of greenhouse gas emissions. The nearly 400,000-sq.-ft. distribution hub will be the company’s largest facility on the East Coast, serving Florida and the Caribbean. UNFI’s decision to transfer distribution routes from its Atlanta facility supports the company’s commitment to Environmentally Responsible Initiatives by reducing greenhouse gas and CO2 emissions.
An area’s transportation network is often the key factor in site decisions, including considerations such as dependability of delivery (e.g. port access for imports) and whether local roads can support a company’s truck volume.
Access is also important to manufacturers,
but higher ranking factors tend to be low-cost land and work force.
Airport access may also be significant, especially the number and frequency of direct flights and the availability of nearby executive airports for corporate jets.
Site costs (initial and ongoing operations), cost of living, labor force, housing availability and quality of life are criteria shared by most companies seeking locations. In business parks, availability and cost of utilities (sewer, water, power, telecom, fiber) and dependability of the power grid are major considerations.
Krug observes that companies with a strategic vision (long-term goal) tend to make the best location decisions. And a vital factor not yet mentioned: time.
“Bad decisions are almost always the ones made in haste,” he says.
George Livingston, CIPS, is chairman of NAI Realvest in Orlando, Fla. Christie Alexander is principal of NAI Realvest, found on the Web at www.realvest.com.