Relatively low interest rates. Negligible inflation. Improving productivity. They're all ingredients fueling continued economic growth, which in turn have resulted in record growth and expansion for so many companies. And with so many companies bursting at the seams and moving into new markets, the corporate real estate pros have had their hands full.
Choosing an advantageous new site is perhaps the single most critical component to the success of a new store or facility. Site selection has always been a long and arduous process, requiring extensive research that is often costly and difficult to obtain. But just as the Internet is changing almost all business practices, it has become a powerful tool for corporate real estate decision makers. The Internet is a gateway to a wealth of data which can facilitate much of the legwork that goes into the site selection process.
Consider the process that a typical industrial company may go through in deciding where to locate a new manufacturing or distribution facility. A manufacturer will consider a host of criteria before choosing a new site, starting with a larger macro picture and funneling through a series of increasingly specific issues until a few qualified locations are selected. The manufacturer may be drawn to a specific state for the overall business climate or to take advantage of certain economic incentives, which may result in lower operating costs. So the questions becomes: If a site selector is faced with choosing a location for a new facility, how would he or she use the Internet to find a place best suited for that company's particular operation?
A good starting place could be the Dismal Scientist site at www.dismal.com. This site offers a plethora of valuable demographic and business information. The site allows one to compare states or even MSAs using a host of demographic, business, socioeconomic or labor variables. For example, the site selector can compare income level per household and educational levels of the workforce. As a result, the site selector can gain a snapshot of where there is an attractive, educated labor pool, and whether the company could afford the costs associated with that particular source of labor. The Dismal Scientist also offers excellent forecasting information that can help the manufacturer anticipate and take advantage of emerging trends.
Once a few states or MSAs have been identified as possible areas for relocation or expansion, the site selector may want to begin considering other market information that takes into account the logistics of the specific facility. How accessible is the site? Will the supply chain encounter problems with this new site? Variables such as artery counts, traffic counts, ancillary routes, and even weather need to be factored in. Again, the Internet can provide much of the information at a fraction of the price typically associated with costly data feeds or subscriptions.
The National Association of Counties (www.NACo.org), with direct links to county government sites, provides data on county policies, ordinances and codes. Through this site one can glean what types of infrastructure improvements are planned for a particular locale, as well as detailed information on various research surveys and legislative initiatives. NACo also provides links to numerous other county associations, Federal government sites, economic development organizations and environmental-related information.
The environment is another variable that enters into the equation when considering new locations for a business. Federal Express, for example, has strategically located their hubs in locations of predominately temperate weather.
The Environment Systems Research Institute has excellent resources, as well as information on GIS technology (which is a computer-based tool for mapping and analyzing environmental events). According to the ESRI web site, GIS is an ideal tool that can be used in siting a new business by helping the user create maps and integrate environmental information that will help solve site selection problems.
By visiting www.esri.com/hazards/, one can find localized information on floods, earthquakes, hurricanes and all sorts of environmental disasters. The site selector can access such information by zip code, county or even congressional district. Two other sites that can provide excellent mapping tools and aerial photographs are www.terraserver. microsoft.com and www.mapquest.com, which will also help you when addressing the logistics of particular property.
So far our site selection committee has looked at a host of general macroeconomic information and investigated the business climate and incentive programs of different states and counties. They have considered labor costs and looked at the existing and planned infrastructure improvements of possible locations. And they have even considered environmental and climatologic factors. Now it's time to look at the real estate equation and some local property resources. Sites like www.comps.com enable users to do specific, in-depth comparative research to determine what land or building costs have been for comparable properties.
Torto Wheaton Research provides the commercial real estate industry with a host of excellent market research and econometric forecasting tools. Their site, at www.tortowheatonresearch.com, can help in the collection and analysis of statistics like leasing and absorption, which ultimately help budgeting from a real estate standpoint. And a visit to www.marshallswift.com provides the site selector an opportunity to utilize the cost data compiled for new construction in the event that the new facility will need to be renovated or built from the ground up.
These Internet resources provide a foundation for making an informed decision on site selection, which can be supported it with mounds of data on the pros and cons of each site as well as acceptable alternative locations for the new facility. And imagine, we haven't even left the office yet! The Internet offers valuable data mining resources for site selection, truly providing a bridge for a "clicks" and "mortar" economy.
George Gallagher is vice president of Comps.com. Based in San Diego, Calif., Comps.com is a national provider of comprehensive commercial real estate sales information both offline and on the Internet. Over the last 17 years, the Company has developed a data collection and confirmation system to provide information on commercial real estate properties.
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