Initial Discussion with Search Team to Define Key Selection Criteria
Screen Locations and Profile Top Candidates
This step, consisting of three different screenings, is the point in the selection process where local real estate options are considered.
This first screening is by geographic preferences, which are driven by logistics or other business considerations.
Next, they screen by industry presence, which is an Indicator for determining the presence of certain skills or industry cluster.
The third screening is for resource availability, which considers the following factors:
The final screening is to develop comprehensive profiles of the top location candidates.
Present Screening/Profiling Information to Senior Management
On-Site Field Visits
Incentives Negotiation (where available)
Final Presentation and Decision
When a prospective company views an area and its real estate options, there are four levels of evaluation (as outlined below) that frequently drive the decision. Having identified a particular site or building, the search team conducts a quick evaluation of access to an airport (if air travel is important) and the labor force within 30 minutes of the site.
The evaluation team then reviews the local amenities and interstate access that are within a few miles of the site. Lastly, the team focuses on the overall site and the details of the building(s), if present. In the final analysis, it is the site with the best access to resources and manageable risk at the lowest cost that will most likely be selected.
Company requirements will range from large (100+ acre) standalone sites for single users down to 5-10 acre sites within a multi-user park. Many companies will scan the real estate options for the size lot they need but also check the potential for expansion on contiguous land or adjacent sites.
The configuration of a site and its individual lots is also a key determinant of the size and configuration of the building that can be placed on the site, particularly when considering any minimum offset distances required to property lines.
Some companies want to have visual access from an interstate or a primary highway and have their name on the building. Other companies are more concerned with security and want to be located in an office or industrial park that has controlled access, a perimeter fence and lighting throughout. Also important is the location and distance to fire, police and hospital services that are the closest to the site.
As previously discussed, companies seek out real estate options that minimize startup time and limit potential risks. If the type of facility required is relatively generic, the company will first screen the real estate listings for buildings then for building sites. If the building requirements are fairly unique (extra large site or building size, very specialized space layouts, need for high-end architectural features), the company will seek a building site. Different companies and types of operations will be attracted to different levels of readiness – from a developed site to a shell building in place to a move-in quality building.
There is a multi-level scale for determining the level of site readiness (see below). The scale ranges from raw land currently zoned agriculture up to a fully developed site with a building in place. Each level indicates an incremental amount of effort that reduces the time to startup for the prospective company. When a community is considering the development and marketing of a particular site, make an effort to determine what level of readiness will be needed to assure that certain types of businesses will be attracted to the site.
Readiness is ultimately defined by prospective companies as the time required to obtain occupancy in a building on a site.
Level 1: Developed site, new building needing finish and minor modifications (paint and floor finishes).
Level 2: Developed site, building shell in place or existing building needing modest renovation.
Level 3: Developed site with virtual permitted building (based on pre-designed building and defined conditions).
Level 4: Developed site ready for building construction
Level 5: Undeveloped site
Level 6: Zoned land in hands of original owner
Level 7: Land zoned agriculture but is to be zoned industrial or O/I based on the Comprehensive Land Use Plan
Soil conditions and on-site water management can be a major issue for a prospective company. The results of soil boring tests provide the following critical information:
Another critical site issue is the existence of wetlands and the regulations that impact land use and encroachment near wetlands. In addition, the existence and location of the 100-year flood plain can have a significant impact on buildable acres and access within the site.
Access to utilities and their cost and capacity can be a driving factor for a site decision. It is important to know the details related to cost and capacity when having discussions with prospective companies.
Demand for particular utilities will vary by type of operation from food processors that need substantial water and wastewater treatment, electric power and gas (for drying operations) to data centers that need highly reliable power, telecommunications services and water for cooling.
Companies seeking to acquire land are typically concerned over the potential restrictions on use or the establishment of non-compatible land uses (residential developments, schools, public parks, hospitals or high density retail) near the site.
There is also concern over past uses of the site and any potential environmental contamination that may be present on surface soils or in the groundwater from on-site or off-site sources.
Identify the current zoning classification and the designated uses and restrictions of the classification. It is also important to review the zoning classification for contiguous and nearby land parcels that are not part of the site to determine the types of activities that may be planned for the future.
Identify the current and past land uses for the site and adjacent sites.
The Federal Environmental Protection Agency (EPA) requires a Level 1 (Phase I) Environmental Assessment to be completed as part of the due diligence process for commercial and industrial property transactions. The requirements for the assessments follow ASTM procedures along with some additional actions defined by the EPA.
The assessment is performed by a certified professional engineer and requires a thorough review of older maps, aerial photos, published reports, interviews with key people knowledgeable of the site, and other sources. The engineer will also walk the site (and observe adjacent sites) seeking any indications of past activities that may have been sources of contamination.
If a potential for contamination is identified, a Level 2 (Phase 2) site testing procedure must be completed to either verify of refute the potential presence of contamination.
If the site is within an industrial park, the company will want to review all covenants and restrictions that are imposed on the park residents.
Having access to different modes of transportation are criteria factors in site selection. It is important to place the site in context with its access to interstate, rail, air access and ports.
The company will often review the route from the site to the nearest interstate interchange and determine the width and quality of the secondary highway (number of lanes, shoulders, turn lanes, etc.) as well as the number of lights, and the existence of sensitive receptors (schools, hospitals, parks, major retail areas and residential areas) that may be impacted by truck traffic. If any traffic studies have been completed, they may want to review the projected traffic patterns near the site.
Certain manufacturing and energy-related operations require rail access. It is important to note the available rail freight carriers that serve the area, frequency of operations, pricing structure, and other companies served. Also note the distance to the main line and the cost of bringing access to the site and the building.
Identify the travel distance to the local county general aviation service as well as to the regional airport with commercial service. Details on air freight service, direct flight destinations and other information will be of importance to certain companies.
Define the travel distance and modes of transport from the site to a particular port facility and the types of cargo that can be handled.
There are other resource factors that a company may review in selecting a site that go beyond the site itself. These are very critical needs for certain types of companies and operations and the community should be aware of them.
In the location screening process the project team normally profiles the county or MSA for current population levels, five year growth trends, education levels of residents, unemployment rates, and employment levels for specific industries. Frequently, the company or its consultant will interview existing employers to determine labor quality and supply issues as well as length of average commute distance and time. After a site is selected, the company may plot and quantify the labor resources within the stated commute distance.
For operations that require a significant relocation of staff (e.g., R&D facility, IT support center, headquarters, etc.), the community quality of life attributes will be a serious consideration and include: cost/availability of housing, quality of K-12 education, access to universities, health care facilities and cost, recreation/cultural options, social organizations and meeting places (coffee shops, unique restaurants, etc.) and other factors.
Some companies will want to have local access to amenities and services such as a health club/gym/walking trail, restaurants and hotels for guests, business service providers, and others.
The site certification program demonstrates to prospective companies that the community or owner of the site has made a significant investment to prepare the site prior to marketing. This investment relates to lower cost and risk for the company.
The consistency of what is defined as certified will determine the credibility of the program and buy-in by prospective companies.
Companies don’t acquire just a site but the access to a package of resources – that will vary in scope by company, by type of operation, and by life cycle stage of company.
Not all companies are seeking dirt. Many will be attracted to a site that has a spec building, frequently a flex building.
It is very important for communities to realistically define what types of industries and companies would be most appropriate for a given site. Without this realistic expectation, the community may be waiting for the bus that just never comes.