Complexities of the Site Selection Process in Commercial Real Estate
It’s not new news that the location you choose for your new development can make or break it. According to Deloitte, “few corporate decisions have as many immediate and long-term implications on tax structure, cost of goods sold, supply chain, labor force, and overall operations success as the choice of location.”
Yet, there is no black-and-white answer for what makes a site the perfect choice. The site selection process is actually quite complex, and even promising data in and of itself is not enough. These complexities include evaluating everything from geography, zoning, and market demographics to the available labor market, environmental legislation, and even politics.
However, understanding and navigating the most basic business principles appropriately can be foundational for your success! Here are just a few preliminary factors to consider before you begin your site selection process:
- Search Area
- Business Goals
- Budget & Costs
- A Site Selection Team
Southeast Venture’s development and brokerage professionals have extensive knowledge of the development process from site selection to permitting, design, financing, construction and property management. Learn more.
Believe it or not, determining the search area for your site selection is not as simple as it seems. Resist the temptation to hone-in on the specific area you hope to set up shop. Instead, start big and take all your options into consideration. Keep in-mind that even if an area is growing and shows promise, that does not mean it will be the correct choice for your business.
A number of factors need to be considered as you draw the circle on your search area: Is the area easily accessible via highways and other main roads? Will you have access to the labor force you need? Is this area, while desirable, going to favor your business more than another?
You cannot choose a site successfully without first outlining your business goals, objectives, and current trajectory – period. While your business and your site selection impact one another, they don’t necessarily sustain the other. You not only have to be strategic and specific about the goals you want to achieve but also outline the ideal location that will help you do so.
For instance, weigh whether or not the site in question will help you yield the highest overall return – whether in terms of finances, exposure, or networking – and compare those answers to those of other potential sites. Will the location establish your place in the market, offer a tax break, give you a leg-up on competitors, or serve as a conducive site for your business’s future growth?
Budget & Costs
Speaking of business goals, site selection is rarely as simple as finding everything you want and need, and it just so happens to be within the budget. The comprehensive costs of your site selection will need to be examined line-by-line, from purchase price and land development estimates to taxes and maintenance costs.
In other words, you need reality testing. Before taking any action with a potential site, conduct a business case analysis to evaluate implementation costs, any severance or relocation costs, as well as costs that can only be estimated. But don’t focus solely on what it will cost you; also do due diligence researching and estimating your potential profits.
This process can also be made more difficult due to real estate sales, leasing, and financing. During this process, you’ll need to keep in mind things like obtaining a loan or what it means in terms of your long term investments.
A Site Selection Team
The #1 critical mistake companies make in their site selection process, which can lead to risks, higher costs, and – worst case scenario – failure? An unprepared site selection team, or the failure to utilize one in the first place.
Hiring an experienced and local site selection team can be the key to a successful and exceptional location for your business. Southeast Venture’s integrated, multi-disciplined approach to development projects pays off in spades for our clients. With our company’s primary focus founded on development in 1981, we have achieved exceptional results for hundreds of clients and developed more than 1.2 million square feet of commercial real estate. In addition, our experienced brokerage team is able to to anticipate and address potential problems before they become obstacles to a sale or lease in all industries such as retail and healthcare.
Contact Southeast Venture about your project today.