Location and Site Selection

Document Sample
Location and Site Selection Powered By Docstoc
					The Truth About Site Selection
           November 8, 2003

  Bruce Maus, Corporate Real Estate Inc.
      Linda Lund, CRESA Partners
        Site Selection

1. Why do Businesses Invest in New

2. How Do Companies Make Location

3. Site Selection Process

… in this world nothing is certain
      but death and taxes.

                  Benjamin Franklin

and Change!
       Bruce Maus
           Causes of Change

• The world continues to shrink due to the
  speed and availability of information

• Shift in the value of proprietary technology
  to process technology – Lester Thurow

• Increasing consumer demands for products
  and services to be Free, Perfect, and Now
                           (Robert Rodin)
 How has “change” made an              *

impact on location decisions?

  Rapid change creates uncertainty.
  Therefore, companies demand
  flexibility in facility solutions:
   – Shorter leases with options
   – Generic and flexible design
   – Exit strategy
 How has “change” made an                   *

impact on location decisions?
Compressed schedules
  – The start date moves but not the
    completion date
  – Demands for simple solutions to complex

Pent-up demand
  – Wait too long to make decisions – the
    flood gates open

“I don’t know what my company
   will look like in five years”

      Recent quote from the CEO
       of a $2 billion company
    What drives the need for a
         new location?
•   Market opportunities
•   Labor market constraints
•   Corporate change (merger/acquisition)
•   Need to be close to customers
•   Other company specific factors
•   Cost containment
 How do companies make
   location decisions?

Faster than Ever!
  Corporate       Senior Mgmt
Strategic Plan

 Oper’l & RE      Business Units
Strategic Plan    +Corp.-Wide

  Facilities      Business Units
Strategic Plan    +Facilities-Wide

                  Real Estate +
Who makes the decision?

   •   Human Resources
   •   Finance
   •   Operations
   •   Consultants
      Corporate Location Trends
• Activity was down – before September 11
• Most active industries:
  –   Pharmaceuticals
  –   Biotechnology
  –   Food Processing
  –   Telecommunications
  –   Electronics
  –   Plastics
  –   Customer Contact Centers
  –   Financial Service Centers
  Corporate Location Trends
• Seek reductions in all costs related to
• Economic slowdown – Sept. 11 Impact?
• Retention of key employees
• Some employers unwilling to be employer
  of choice (big fish; little pond)
• Want it when they need it
 Corporate Location Trends                     *

• Smaller communities and rural areas
  becoming increasingly popular
  –   Better work ethic
  –   Lower costs
  –   Available land
  –   Telecommunications - increased quality
  –   Internet - can go anywhere

• Selecting a Region/Country

• Selecting Communities

• Selecting Best Sites

•   TIF/Tax abatement
•   Utilities
•   Government loans/grants
•   Block grants
•   Training dollars
•   Do they matter?
Site Selection
           “Hey, we’ll be lucky
           if we ever sell this
           Well, it’s like
           everyone says....
           location, location,

           The Far Side
           by Gary Larson
       Site Selection Criteria

• Key Issues:
    Location, Location, Location
    If you buy real estate, buy it with the
    thought in mind you may have to sell it
        Site Selection Criteria
• Key Issues:
  – Customers, suppliers, workforce
     • NOT location, location, location!!!
  – Transportation
  – Site/Building issues
     • Topography, scale, shape, condition, visibility, etc
  – Zoning/Use restrictions
  – Utility service
Site Selection Criteria
• Key Issues (Continued):
  – Total Operational Cost
  – Labor
     •   Supply
     •   Quality
     •   Cost
     •   Transferee appeal
     •   Training
     •   Union
     •   State regulations
     •   Access to public transportation
          Site Selection Criteria
• Environmental Issues
  –   Air emissions standards
  –   Water quality, quantity, emission standards
  –   Existing contaminants
  –   Cultural issues
  –   Endangered species
  –   Development constraints
       • Protected wetlands, etc
  Site Selection Criteria

• Subjective Criteria
  – Business climate
  – Quality of life
  – Proximity to other operations and
    senior management
           Sample RFP
•   Build 50,000 sf building
•   50 jobs
•   5 acres of land with services - cost
•   Available buildings
•   Wage data for 5 job descriptions
•   Community profile
•   Aerial photo
•   Site plan with utilities
•   Incentives available
    Corporation’s Top Ten List

10. Local Leadership attitude toward project
9. Customer perception of area – IMAGE
8. Incentives
7. Access – Various transportation modes
6. Adequacy of infrastructure –water, sewer,
    telecom, power, gas, etc.
Corporation’s Top Ten List

 5.   Speed to Market
 4.   Labor Quality and Quantity
 3.   Taxation Cost
 2.   Transportation Cost
 1.   Labor Cost
Case Study: Land O’ Lakes Animal
      Food Processing Plant

 •   Site location criteria
 •   Variable & fixed costs
 •   Subjective criteria
 •   Results - Black River Falls, WI:
     – Affordable electric energy rate
     – Buildable site with low construction costs
     – On Interstate 94
 Case Study: Arctic Cat

• Site selection criteria
• Driving factor - logistics
• Results: Bucyrus, OH:
  –   200,000sf distribution center
  –   Improved customer response time
  –    Proximity to suppliers & customers
  –   Speed to implementation
    How Can You Influence The
       Location Decision?
• Thorough knowledge of the community
• Choices of ready to go sites
• Community database that is current
• Utility capacity to serve industry needs
• Documented labor market statistics and
• High quality appearance (CBD)
• Affordable and available housing
     How Can You Influence The
        Location Decision?

•   Website that is easy to find and use
•   Prompt response to requests for information
•   Capacity to quickly arrange prospect visits
•   Ability to deal with confidentiality
        The New Paradigms for                *

        Economic Development
• Don’t teach your clients the business of
  economic development

• Give your clients and consultants exactly
  what they ask for

• Understand forces driving business decisions
The Truth About Site Selection
          November 8, 2003

  Bruce Maus, Corporate Real Estate Inc.
      Linda Lund, CRESA Partners