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Expedited Permitting: Time is Money

The results of Area Development's 2007 Corporate Survey reflect the growing importance of fast-track permitting as speed to market becomes more and more critical to manufacturers.

Doug Stachowiak, Global Location Strategy and Optimization, Chicago, NKF Consulting and Robert Hess, Executive Managing Director, Consulting, Newmark Grubb Knight Frank (Oct/Nov 08)
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Measure potential speed to market.
Evaluate locations using permitting time frame as a heavily weighted, critical location criteria. Look for locations within the search area that have a history of offering a fast tracked permitting process and completed projects of similar complexity.

No community will throw out the processes they have in place to make sure buildings are built right - they must remain good stewards for their citizens and adhere to established building and zoning codes. However, certain communities have become more aware that they stand a better chance of landing the deal if approvals are processed quickly and efficiently. It is becoming common to have an ombudsman in place to funnel and coordinate all permit applications. With one agency in charge of shepherding the entire process, it resembles one-stop shopping and can shave months off the permitting process.

Know your real estate well.
Robust and thorough site due diligence is a must. Environmental concerns? You can be standing on a perfectly dry spot in a field proposed for your next manufacturing location, but still have wetlands issues that aren't evident to the human eye. You might need 220 acres for your project, and find out later in the due diligence process that 40 acres have wetland issues and significantly impact the proposed building layout on the site. Any discovery in the due diligence process can negatively impact the permitting process by months, if not years. The same holds true for existing buildings with outdated wiring and/or potential asbestos removal needs - even poor prior investments in the areas of ADA compliance, fire protection, and signage that are not flagged during due diligence plant the seed for inspector objections and conjecture.

Corporate Survey 2007
Combined Ratings* of 2007 Factors
Site Selection Factors           2006 2007
Ranking
1. Highway accessibility 90.9 96.9
2. Labor costs 95.0 92.3
3. Energy availability and costs 82.4 89.0
4. Availability of skilled labor 85.1 88.7
5. Occupancy or construction costs 85.5 88.2
6. Available land 73.3 85.4
7. Corporate tax rate 90.8 83.8
8. State and local incentives 88.6 83.4
9. Environmental regulations 68.9 83.2
10. Tax Exemptions 86.7 82.8
10T. Proximity to Markets 76.9 82.8
11.
Availability of advanced ICT services
N/A 82.2
12. Low union profile 78.4 80.6
13. Availability of buildings N/A 79.3
14. Right-to-work state 67.1 72.1
15. Proximity to suppliers 49.3 71.8
16. Expedited or "fast-track" permitting N/A 71.5
17. Availability of unskilled labor 65.3 65.2
18. Availability of long-term financing 64.1 63.0
19. Raw materials availability 64.1 62.5
20. Training programs 56.0 56.6
21. Accessibility to major airport 61.4 54.4
22. Railroad service 20.8 38.1
23. Proximity to technical university 30.0 32.7
24. Waterway or oceanport accessibility 17.0 15.2
*All figures are percentages and are the total of "very important" and "important" ratings of the Area Development Corporate Survey and are rounded to the nearest tenth of a percent.
Go green.
Many cities are becoming aggressive about building green, LEED-certified buildings, and are offering expedited permitting for companies that include green initiatives in their building plans. Chicago and Portland, Oregon, are examples of cities that are promoting environmentally friendly building design, and possibly these cities will accelerate the permitting process for green projects. In extreme cases, the permitting process for non-green building plans might actually be slowed, and companies could face additional costs.

It's no surprise then that the environmental regulations factor jumped from 15th to ninth place in Area Development's 2007 Corporate Survey, with an 83.2 percent rating. Most of the green initiatives to date have been for office space or commercial uses. However, there are examples of green industrial uses, like the environmentally friendly distribution center built by JohnsonDiversey just outside of Milwaukee, which received a gold-level LEED certification from the U.S. Green Building Council.

Beware of waived permitting fees.
Some municipalities will waive the permitting fee as part of an incentives package. Although the waiver could potentially save the company hundreds of thousands in one-time project costs, if the fee is used to hire an outside firm to speed up the process, any accelerated approval schedule benefit is lost. By accepting the waiver on permitting fees, you may save money up front, but the process could ultimately take much longer and cost you more money in the long run.

NKF Consulting, a Newmark Knight Frank Company, provides real-world business and project management solutions for companies throughout the world, helping to reduce risk, accelerate savings, and ensure a single point of accountability. Newmark Knight Frank is one of the largest independent real estate service firms in the world. Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank Newmark operate from over 165 offices in established and emerging property markets on six continents, with a combined staff of more than 6,300. Last year, transactions were valued at more than $47.6 billion with annual revenues of over $962 million.
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