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In Focus: Five Features of Successful Business Relocations and Expansions

By looking beyond just cost factors, those charged with the location decision can also help the environment and reduce stress.

Q3 2014
Can your relocation or site selection eliminate your company’s rent expense for the next five years and reduce your carbon footprint to net zero? “Expansion and relocation are two of the most important — and most stressful — business decisions,” says Jeff Baryshnik, president of the Republic Real Estate Funds, which has acquired more than a million square feet across the country in the past 18 months, and helps companies relocate. “The most common mistake is focusing solely on cost. If cost were the only consideration, we’d all be working in China.”

To explain the “Five Cs” of relocation and expansion, Baryshnik points in part to Atlanta’s vacant 200,000-square-foot Sunrise Center, which Republic recently acquired and upgraded after Citigroup/Primerica moved to a new headquarters in Duluth, Ga. Here’s what he has to say:
  1. Capability: You need a deep pool of well-educated employees in a pro-business location. If there are no qualified employees nearby, you may as well pitch a tent in the desert. Northeastern Atlanta, for example, has almost twice the percentage of adults with bachelor’s or master’s degrees than the United States as a whole, and the region is home to more than 100 foreign companies, including three Fortune 500 headquarters.”
  2. Cost: You need to focus on low costs in today’s competitive environment, including low rental rates, low taxes, and the availability of tax incentives. According to KPMG’s 2014 Competitive Alternatives study, Metro Atlanta has the lowest operating costs of any large U.S. city. Also, because the Sunrise Center is in an Opportunity Zone, any company that rents its office can get as much as $17.5 million in tax credits, equal to more than five years of free rent. Likewise, Texas, Nevada, and Colorado are lower-cost states.
  3. Connectivity: You need to locate your new office somewhere with strong transportation and communications infrastructure connectivity. How easily can you fly from your new office to your customer locations? How many fiber Internet providers are available? This calculus suggests a focus on major metro areas such as Charlotte, Dallas, or Chicago.
  4. Climate: You need to move to a city that’s growing or it will be harder to attract and retain employees. It’s also easier to persuade employees to move somewhere sunny than to uproot families from Los Angeles and move, say, to Detroit. Independent surveys suggest that the Southeast and Southwest are home to business-friendly climates.
  5. Conservation: Last but definitely not least, conservation and sustainability should be a part of your decision since it impacts employees’ decisions about where to work and customers’ decisions about where to shop. The Sunrise Center renovation, for instance, has conducted a sustainable renovation in the hopes of earning LEED certification.
As Baryshnik advises, consult with office relocation and expansion experts including leasing brokers, site selection consultants, tax credit experts, etc. He adds, “It’s notable that The Wall Street Journal reported that Toyota’s upcoming relocation came down to a choice between Dallas, Atlanta, Denver, and Charlotte — all cities that rank highly on KPMG’s list.”

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