Performing the Site Work
Once you have a short list of target communities, it's time to start looking for available real estate.
search channels in your targeted communities (real estate brokers,
economic developers, etc.) of your requirements. Be clear and direct
with the information you request and the format in which you request
it. This will make life easier going forward. Be sure to ask about:
• Utility availability, redundancy, and cost
• Access to site/building
• Environmental issues and restrictions
• Zoning and neighboring land uses
• Site/building history
• Technology amenities such as fiber or uninterrupted power supply
• Whether the site/building is in an incentive zone
• Flood zones
earlier analysis. For example, earlier in the process you considered
the demographics of whole communities. Now you can refine those
statistics to consider the demographics surrounding a specific site.
Select two to three sites/buildings in each community.
short-listed sites/buildings. A picture may be worth a thousand words,
but you'll need a lot more than that to make an informed decision.
financial pro formas on at least your top three sites/buildings. Be
sure to include sites/buildings in at least two different communities.
Even if there is a clear leader at this point, it's advisable to have a
Plan B. By now you should be able to include some estimates of
potential economic development incentives in your pro formas.
that some projects are constrained by the availability of specialized
facilities. Plug-and-play call centers, data centers, and mega sites
are examples. For these projects, it may be necessary to reverse the
sequence, starting with site identification rather than market
evaluation, or melding the two.
Run It Like Clockwork
this point, you're ready to enter serious negotiations. One could write
pages of checklists for this part of the selection process, both for
the real estate negotiations and the incentives negotiations. Instead,
here are a couple of key concepts to keep in mind:
coordinate all activities. Timing is everything at this stage. Real
estate negotiations must be coordinated with economic development
incentives negotiations. Incentives frequently have a "but for" clause
attached to them, e.g., you have to attest that "but for" the
incentives, you would not put your investment in a given location. If
you have already locked down the real estate, it will be very difficult
to make the "but for" case.
Conduct your own market research.
Have a good knowledge of average real estate prices in the area. Seek
out "comps," i.e., details on recent, similar property transactions.
Knowledge is power - and leverage. Likewise, learn what you can about
economic development incentive packages awarded in the past to projects
similar to yours.
Preparing for Challenges
invariably emerge. Whether they derail or delay a project is a matter
of planning. Being alert to potential challenges may help you avoid or
minimize their impact. Considering the following points before
encountering an obstacle can help keep a project on track:
consensus on the management team. Despite your best laid plans,
internal team conflicts may occur due to personal biases or the sense
that the process has begun to favor one group's needs over another's.
This is when you can point to the careful work done in the planning
stage and remind everyone of the overall goals of the project and the
objectivity of the analysis process.
Stay focused over time.
During most projects, there comes a time when management is distracted
with other issues and not able to move forward as quickly as planned.
Be realistic when forecasting the amount of time your internal team can
devote to the project, and expect the unexpected.
confidentiality. Rumors move fast and can distract your work force, tip
your hand to competitors, and damage relations with your host
community. Use a project code name instead of the company name, and
remain anonymous for as long as possible. Using an outside consultant
enables you to stretch this period of anonymity, but at some point you
will need to reveal your identity to move the project forward. Stay in
touch with your legal counsel throughout the process and be ready to
put an NDA (non-disclosure agreement) in place when you need to share
Things will change - Adjust course as
needed. Favored locations outside the project scope, changes in the
competitive landscape, and financial changes are common examples.
Consider each of these challenges separately, and determine whether
altering the scope adds value or is merely a distraction.
location is perfect. Top ranked cities may be geographically remote,
lack the lowest electricity rate, or possess other undesirable
attributes. The key to success is being able to quantify the trade-offs
and understand their impact on your operation.