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Planning for the Long Run

Can you anticipate your company's future facility needs? Eliminate tomorrow's challenges with practical strategies today.

Nov 06
As a corporate facility manager, you are facing challenges in the current economy that may have you resembling the tortured soul portrayed in Edvard Munch's painting "The Scream." Your operators come to you desperate for space due to fast paced growth, consolidation, a shift in market segments - or possibly all three. The immediate occupancy requirements allow you less than ample time to perform a thorough location optimization study and go through the typical acquisition and development delivery cycle. You also have to address the competing and possibly conflicting interests of your operators, customer base, ownership, and other constituents, while the budget allocated for delivery of the facility solution is less than generous.

Take comfort in the fact that you are not alone. Corporate facility managers like you are facing these challenges all over the country, and will likely continue to do so in the foreseeable future. These economic and market conditions call for thoughtful solutions that focus on the ability to withstand further change. The long-term success of your solution - whether it be office, industrial, manufacturing, or some combination - will be measured by the location's ability to meet near-term needs and the long-term challenges that result from a continually changing economy. A solution that allows for continual flexibility over a five-, 10-, or 20-year period will result in a competitive advantage rather than a solution that merely addresses immediate space needs.

Practically speaking, how do you set about addressing the requirement with such a long-term view and still give your operators what they need? I often urge my clients to focus beyond the walls and parking areas that typically define the facility. I offer the analogy of the decision process in choosing a home. Typically, attractive finishes, appealing kitchens, and the number of bathrooms are among the factors that strike a strong emotional response to a homebuyer, and may likely be the difference in deciding which home to buy. If, however, you ask that same homeowner five years from now whether she is happy with the home buying decision, the answer will likely be something along the lines of "Yes, we love the neighborhood and the sense of pride our neighbors have in the community" or "No, we've outgrown the house, our neighbors are a constant nuisance and the increased traffic has made it less safe for the kids to be outside."

So it goes with a large facility decision. It will typically be flexibility in sizing, the surrounding uses, and community-driven issues that dictate long-term satisfaction. Identifying these issues and how they may evolve over your facility planning horizon is a difficult proposition. Keeping them on your radar screen when evaluating locations is the first step. For discussion purposes, let's use the example of a 300,000-square-foot distribution facility requirement. The required delivery schedule may or may not allow for the development of a greenfield site. Let's assume it's an option for this example. In addition to the basic sizing requirements (bay spacing, clear height, power and utility requirements, dock positions, etc.), there are other key criteria that should be evaluated yet are often overlooked.

Size Really Matters
A reasonable first step will often involve the consideration of long-term expansion requirements, which would result in the purchase of excess land, building space, or both. In considering the future of your business, think about whether your sizing decision is setting the stage for a similar exercise in five years. What will be the key changes to your business operations that may become space users or reducers? Referring to our example, will the way product is stored or racked likely change? Will the means by which product is retrieved, sorted, and picked be modified? Ask your facility operator or logistics expert about any trends in equipment that may increase efficiency and have an effect on sizing (conveyor equipment, forklifts, etc.).

Consider the movement of vehicles around the facility in current and future form. Are truck movements likely to increase in volume? Will there be a need for increased trailer storage? Will the size of vehicles change? The answers to these key questions all relate to the amount of space along the dock faces of the facility, and they significantly dictate acreage requirements. Consider an exit strategy for the facility as well. Are you creating any interior or exterior dimensions that may be unique or difficult to market to another user or investor? The cost of purchasing a reasonable quantity of expansion land must be carefully weighed against the cost of outgrowing the new facility in a less than desirable timeframe. While some overheated markets may make such a decision hard to financially justify, in most cases the cost of excess land is a wise "insurance" policy and provides flexibility for your operators.

Utility (gas, water and sewer, electric) availability from local providers and site-specific capabilities and limitations will remain major issues for consideration, significantly affecting operating cost and capabilities. Again, carefully consider your future operation and/or exit strategy and weigh the benefits of upgrading or upsizing as an investment for the future.

Check Out the Neighborhood

Once you determine which options meet your sizing criteria, take a thoughtful approach in evaluating the adjacent uses of each alternative. Referring back to our distribution requirement, an obvious place to start is a review of the movement of vehicles (passenger and truck) into and out of the facility.

Start by carefully reviewing the route(s) leading to the location from major highways and thoroughfares. What obstacles stand in the way of uninterrupted access? Identify potential traffic generators such as high-density retail or residential uses, large office or other industrial uses, and at-grade rail crossings. If possible, try to observe these areas during peak traffic hours and make note of which intersections back up and delay vehicle movement. If much of the access corridor is vacant or in a transition area, talk to local planning officials about intended future uses for the area.

What types of business is the community trying to attract or discourage? Are these uses compatible with your operation? I always strongly urge my clients to be especially wary of existing and future adjacent residential uses, as they are fast becoming the most problematic among industrial neighbors. It should be of no surprise that truck and machinery noise, excessive light, unpleasant odors, and spoiled views can upset existing and prospective homebuyers. Look for a significant buffer from the nearest residential area. In a situation where this is unavoidable, the acquisition of additional land to provide for such a buffer is a wise strategy.

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