Finding Your Ideal Commercial/Industrial Building - Part II
Location-Specific Advantages (LSA’s) enable a company to improve its bottom line and rate of growth by strategically finding the optimum place to operate as compared to other locations.
We always hear the same phrase associated with real estate. “Location, Location, Location.” It may be a cliché but all clichés have some basis in reality and this one is no different. The location of your plant will affect your business, positively or negatively, for however long you are there. In addition, how it affects your business can, and probably will change over time. The location will affect and constrain your access to:
Cost – Real Estate & Property: The purchase price required, associated land transfer taxes & fees, land/site developmental requirements, building and/or renovation costs for this site and how do they compare with alternative sites?
Customers – Your local prospects & clients: What is their purchasing power and product preferences, are they growing/stable, and the degree of competition (yours & theirs)? Collaboration potential for pilots / start-ups and the opportunity to share expert personnel and high capex infrastructure. Can a premium be charged in the area due to your local presence & support?
Further Away Clients: How easy is it for them to visit your plant? Are there hotels, restaurants, and entertainment available within a reasonable distance?
Work Force / Skilled labour – How many people will you need to hire and what training will they require? Are local resources good enough for your technology, competitive rates & adequate numbers of local labour, or will you need to spend a lot of time and money in training people up to your level and/or relocating skilled people?
Suppliers – How will your suppliers ship material to your plant? Cost impact +/- due to your location as compared to other locations. Do they have a local presence that offers some synergies?
Services – Easy to obtain, reasonably priced, stable and adequate access to water, electricity, gas, etc that is necessary for your processes, both now and as you grow.
Transportation – Access to trucks, trains, containers, maybe even helicopters. How to move them in, un/load and out of the facility as effectively as possible? The potential for transport pinch points: e.g. port & rail congestion, slowdowns / availability, history of labour issues, overall condition, and safety/security considerations.
Expansion – Does the site size allow for future expansion both for your current products and for any new products you may developeGovernmental – Taxes, regulations, incentives, dis-incentives: Tax holidays or breaks, operational restrictions, allowable business types / zoning, environmental permitting and ability to expand your footprint.
Neighbours – Are you in the middle of an industrial park or an urban area. Community Support & Acceptance: Will your normal operations and transportation requirements create friction with people in your immediate area?
All these and many more considerations are important and must be considered before entering into any agreements. You are going to be using the new facility for a long time. It is important that it meets your needs and that you can be comfortable with the location both now and for a long time into the future.
Stay tuned for part III -- SIZE and why it really does matter!
Contact us when making your next move!
Edward Drennan, P.Eng. 30+ years Industrial / Commercial Experience
Your Trusted Partner in Real Estate
Ed White, CPIM CIRM CSCP CPF 6sigma – Jade Trillium Consulting
Making processes & organizations more effective
Not intended to solicit buyers and sellers currently under contract with another brokerage