5 Real Estate Site Selection Criteria to Consider as a Business Owner
For many businesses, finding the right site is a critical component of long-term success.
But the site selection process is daunting -- you're already juggling too many balls as a business owner -- you don't have time to add real estate professional to the list.
So instead of learning the ins and outs of the real estate development process yourself, we're here to help.
In this video, we discuss the 5 key real estate site selection criteria you need to consider if you're weighing an expansion or trying to find a new location for your business.
Guide to the video
- Finding a site in the path of development growth can make the buying and development process simpler
- Real estate can be a talent acquisition and retention enablement tool - the right site supports this effort
- Budget will almost always be a limiting factor - business owners should weigh their site characteristics by importance against limiting factors like budget, timeline, etc.
Video transcript follows
So, you’ve decided you’re going to expand into a 2nd or 3rd location. That’s awesome, and exciting, but scary at the same time.
Or maybe you’re just relocating from your current building because you’re growing, or your lease is expiring, and you just need some new space.
They’re challenges just the same. And because you run a business, you don’t have the time or the bandwidth to put on yet another hat and learn how to play part-time developer or learn the ins and outs of the real estate development process.
Stay tuned as we help take some of the mystery out of the site selection process for you.
Hey everyone – it’s Matt Marsh with Marsh & Partners.
Marsh & Partners is a real estate development and consulting firm that helps business owners and investors maximize their real estate and transform their businesses.
It’s more than just a question of what makes a good site for development. And it’s more than just a question of site selection in general. Because your business is unique, and your site should enable and amplify your unique operations.
In this video, I’m going to discuss 5 real estate site selection criteria you should consider as a small business owner.
So, let’s jump right in.
1. Understand the path & trajectory of development growth
Have you ever wondered why some areas develop faster than others? It’s a fascinating thought experiment that requires insight into human psychology, macro and microeconomic considerations, and the natural formation of communities.
Growth might be spurred because of demographic trends. Or it could be because of public utility capacity. Or maybe it’s because of quality of life and the cost of living. Or it could even be because of political pressures and the business climate.
The point is, whatever the reason, some areas are more prone to growth than others. And the trajectory and direction of that growth is an important consideration for you and your business.
Not only is it important for your bottom line, but it’s important for the value of the land and property as well. And property in an already highly developed area will likely be accompanied by more land entitlement challenges.
You’re not used to leaving money on the table when it comes to your business, so why would you do it with your real estate.
2. Zoning & allowable use
Every piece of land has a distinct zoning that dictates what can and can’t be done on it. And every municipality has its own guidelines that govern land use and development.
You may find the perfect site that’s the right size and in the right location. But does it allow for your business’s use?
If it doesn’t allow for your use, what’s the likelihood of a successful rezoning? And even if it can be rezoned, are you prepared for the extra time and financial commitment required to make it happen?
I’m not telling you to go out and read the entire development manual cover to cover. I haven’t even done that.
But it’s important you understand that land-use rules exist and that they’ll impact your site selection. Hiring the right civil engineer and assembling the right development team to help you navigate these challenges is an important step toward success.
3. The ability of the site to attract & retain talent
Talent acquisition and retention is a huge problem for companies right now.
Employees are more mobile than ever. And the solution is no longer as simple as writing a bigger check than your competitor.
What are your ideal candidates looking for?
Are you pulling from a local university or other feeder program and proximity is important? Are your employees generally driving from the same geographic area? Or have you adopted a hybrid model and the unique site characteristics are less important.
Spend some time thinking about what your current employees are looking for, and what your prospective future candidates would want.
Real estate can be a fantastic tool to help solve labor problems. So don’t let your site be the reason your competitors beat you for talent.
4. Site specific characteristics
Before you undertake the site selection process, you’ll need to know exactly what you’re looking for.
Marsh & Partners has a site selection and land acquisition due diligence checklist that is a good place to start. But you’ll also want to prioritize your own business’s site-specific criteria.
Consider a couple of the following questions to get you started:
- Proximity to amenities
- Access to major highways or heavily trafficked roads
- Road frontage
- Ability for on-site expansion
- Site ingress and egress – for instance, some sites only allow for right-in right-out access
- Demographic metrics
- Geographic coverage
That’s not an exhaustive list, but you get the idea. And once you’ve identified all the site characteristics that are important to you, you’ll want to prioritize them by importance.
But if you first start with your end goal, which in this case is your ideal site criteria, and work backward to find the right location, you’ll have a much higher likelihood of success.
In a perfect world, you’d find the perfect site that matches your criteria and is in your budget. But how often does that actually happen?
As a small business owner, cash is king – every decision’s opportunity cost is weighed against alternative deployments of those same dollars.
So, when you do find a site that appears feasible, at least on the surface, it’s important to peel back the layers and take a deeper look.
You’ll want to identify any site issues that could impact the project budget before you’ve spent a bunch of money on real estate due diligence work.
It’s important to assess things like:
- Estimating site work & land development costs
- Determining what kind of development financing makes sense for the project
- Environmental risks
- Potential off-site improvements
Once you have a strong grasp of costs associated with the site, you can make a much more educated decision about whether the project fits into your overall budget.
We’ve also published a free 65-page guide that gives business owners a deep dive into the real estate development process to ultimately make better decisions.
Check out the video description for more info on these resources.
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