5 things to consider when choosing a business location

by: Jennifer Sharpe//The Journal Record//August 10, 2017

It is said that real estate is all about location, location, location. Choosing the right commercial real estate is all about location, but the company’s location decision is based on a variety of factors. Experts weighed in on the most important factors a company should consider when searching for a business location.

Workforce

The most prevalent consideration is workforce availability, including skilled workers, for both the short and long term. When choosing an office location, companies prefer to go where there is an abundant, talented workforce available.

“The availability of talent in a given market, and the ability to recruit talent to that same market, are leading factors in most corporate location decisions,” said Roy H. Williams, president and CEO of the Greater Oklahoma City Chamber. “Companies now choose to go where talent resides, rather than hoping that talent will come to their location.”

It is important that the workforce availability is for the long term. Being somewhere that both attracts and produces the next generation of employees has significant appeal.

Oklahoma City has a large talent pool coming from the high number of institutions of higher education in the metropolitan area,” Williams said.

Local companies have tapped into the resource pool of young graduates eager to enter the workforce, which keeps revitalizing their cycle of employees to maintain a steady stream of personnel.

Once the ideal geographic region has been identified, it is important to look at the location’s accessibility for the workforce. Consider where the employees will be living, and therefore commuting from. Ensure that the space is easily accessible for key employees. Think about overall safety for employees traveling to the site. Is the company located in a safe area, and is the commute safe for employees?

The space needs to be flexible enough to accommodate the company’s growth when the workforce expands. As the company’s size increases, the ability of the space to also grow will save the company from having to make a location change down the road. If the space does require modification, be sure to investigate and follow zoning regulations.

Accessibility

Market accessibility is another important factor to consider in choosing a business location, with the extent of dependence varying based on the type of industry the company represents.

“When retail real estate customers are looking for a place to open, they consider traffic pattern information, demographic and lifestyle data, comparative analysis, and tenant mix,” said J. David Chapman, owner of Realty1 LLC and assistant professor at the University of Central Oklahoma.

“There are sophisticated location analysis tools that are able to aid us in finding the right place for the type of retail. We still consider the traditional demographic information such as average age, income, number of households and population,” Chapman said. “Traffic counts are still important; however, we are asking more about optimum levels of traffic as congestion becomes a concern. We want to identify traffic generators, such as other retailers that draw people, office parks, large employers, schools, colleges, and hospitals.”

Though not every company has the same needs as retail, all companies should consider their accessibility to their clients.

“Many companies need to have immediate access to their customers and markets, so proximity drives their facility location decisions,” Williams said.

Regardless of the industry, the company must consider if its location choice is convenient for clients and customers.

Competition should not be overlooked. For some companies, the optimal location would be in close proximity to competitors. For others, the location goal is to stay as far from the competition as possible. The bottom line is that competition is a factor that also needs to be weighed in the location decision.

Transportation

The ability to transport resources in and out of the location is another factor to strongly consider. The importance of this varies on the industry of the company. At the least, companies need materials, and so the ability to get these materials to them is an important consideration.

“To businesses, the need to have access to resources drives their facility location decisions,” Williams said. “The resources they need may vary such as raw materials, critical suppliers, etc.”

Companies should look for easy access to transportation options, such as roadways, rail, air and port.

“Transportation is always important to industrial properties. Access to highways for trucks and rail spur access can be a huge benefit,” Chapman said. “With access to interstate highways, rail infrastructure, underutilized airport capacity, relatively inexpensive land, and a centralized location in the middle of the United States, Oklahoma City is one of the most attractive regional and national distribution plays in the country.”

Cost

Price is a factor that cannot be overlooked when searching for the right business setting. A company needs to make the determination between renting versus building ownership. Alternative renting options also exist in the form of co-working centers and executive office suites.

“Executive suite arrangements have been around for years and have provided managers and salespeople with a private office and access to amenities needed to conduct their business without signing a long-term lease, paying a security deposit, and contracting for furniture, telephones, internet service, and equipment,” Chapman said.

“Co-working centers differ from executive office suites in two very important ways: culture and community. The tenants are called members and rent space in a plug-and-play communal workspace environment where individuals share similar interests, participate in educational opportunities, share ideas, and network in an effort to reinforce a sense of belonging and building community. The workspace ranges from a desk to a private office and can be rented by the hour, day, month, or year.”

Consider state and local tax incentives when seeking out a business location.

“Our pro-business climate plays a major role in our ability to recruit businesses to the state,” said Oklahoma Secretary of Commerce and Tourism Deby Snodgrass. “Oklahoma offers a low overall tax burden, an affordable cost of living for employees and incentives in the form of tax rebates that can reduce a company’s tax burdens even further. Equally important, on average, our industrial utility rates are 21 percent lower than the rest of the nation.”

Image

A final thought on choosing a business location has to do with the big picture. Does the site location fit the overall image, style and appearance that the company is looking for? This is perhaps the most esoteric consideration that would require some introspective analysis on the part of the company’s leaders.