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Corporate Executive Survey Commentary: Which Location Factors Are Top of Mind?

Labor, costs, and accessibility always take precedence, but as the war for talent continues, quality of life has gained in importance, while unionization rates are less of an issue for knowledge workers.

Q1 2016
The top three location selection factors for corporate users rarely tend to change from year to year:
  • Labor — quality and availability
  • Cost — employees, real estate, overall occupancy (including taxes, 1x costs, etc.)
  • Accessibility — logistics and supply chain networks, access to markets, and inputs/employees, etc.
The continuing war for talent: Skilled labor availability, typically the number-one ranked issue annually, ranked even higher than previous years. It also ranked significantly higher than just cost of labor, which is particularly true for knowledge-based industries.

In general, this harder-to-find talent may require a partnership with educational institutions — note that the training programs/technical colleges ranking is also up, reflecting what we see in our clients’ desire for partnerships with these entities in order to provide ongoing training and re-train the existing workforce to meet needs of the corporate user; help develop the local talent pipeline; and ensure continuity among existing employees. This doesn’t necessarily apply to unskilled labor. This is easier to find and is more ubiquitous.

Natural resources: Water, particularly in the West, is on everyone’s radar (availability, costs, and use restrictions). The importance of availability and sustainability of water has risen, and I’d expect this factor to continue to rise in this survey. This impacts industrial users the most (food/beverage manufacturing, agriculture, paper mills, chemical manufacturing, etc.) Right to work and union profile are both down in importance. Why? This is generally less of an issue for companies with a higher ratio of skilled employees.

Available buildings are still really important, but importance of available land seems to have gone down in priority. There are more spec buildings available in many markets (higher point in market cycle…spec is back) — and more options for existing core/shell buildings. Thus, many companies — especially those in higher skilled industries/operations — are focusing less on peripheral locations, so they’re less concerned about land and more concerned about available buildings. Fewer companies are buying land and doing development of their own facility. With time to market being critical, it’s easier to get up and running if you can build out a spec instead of engaging in a ground-up development process.

Quality of life is important but typically not a “first tier” site selection criteria like the top three listed above. However, it is increasingly important, particularly for recruitment/retention of knowledge workers, especially millennials.

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