Choosing the right site is about much more than getting a great space for $32 a foot instead of $33. It's also about choosing a location that fits well with your broader corporate real estate strategy and with your company's marketing, product and financial strategies. All of these concerns make site selection a much more important and sensitive process than it might seem.
Branding Impacts
To take a somewhat controversial example, consider Israeli company SodaStream. Roughly 10 years ago, its CEO decided to locate a major manufacturing facility in a Jerusalem suburb called Ma'ale Adumim. While the community is home to a large industrial park, it is also located in the West Bank on land that the Palestinians consider their own. The facility pays Israeli-level wages, so the company has little to no cost- savings based on its location. However, the choice to locate there has caused the company to either be a proof of how Israelis and Palestinians can work together or a tool of the occupation, depending on who you ask. Meanwhile, SodaStream is just trying to make carbonation machines and syrup.
The SodaStream plant location is an excellent example of how a site can impact perceptions of your company and its brand. Locating in suburban markets sends a different message than being downtown, while an urban fringe location in a "cool" neighborhood creates even different branding. Furthermore, the branding impact of a location can change over time, meaning that a location that perfectly matches your corporate real estate strategy today might be an outlier in five or 10 years.
Logistics Impacts
About seven years ago, a West Coast quick casual restaurant chain opened a few outposts in selected Upper Midwestern cities. While the restaurants initially did well, they closed soon after. Because the company failed to build a logistics pipeline that could effectively deliver supplies and ingredients to the outposts, they were not economically viable in the long run.
Changing or adding locations creates both logistic complexities and opportunities. If a location is inline with a corporate real estate strategy that focused on expansion, it can serve as a first step on the way to a bigger company. New locations can also stretch supply chains or require managers to spend more time traveling to service them. As such, the decision to add locations is not one to be taken lightly.
Impacting the Bottom Line
Ultimately, the location your company chooses will directly impact its bottom line. If your corporate real estate strategy includes comprehensive benchmarking, you can use your existing data to build a model for which locations and types of locations serve you well. With that data, you can focus your search to find only locations that meet those criteria for space, shape, density, traffic count or whatever metrics you use as a part of your model.
Adding competitive data into your model helps you benchmark the location against alternate sites within the market. That information can either lead you to consider alternate sites or give you the intelligence you need to more effectively negotiate with a landlord to get your occupancy cost as low as possible.
Ultimately, your corporate real estate strategy is your company's overall strategies. With locations that are aligned, you can minimize costs relative to productivity while also maintaining an efficient supply chain and presenting a unified branding message. Without having a clear strategy to guide your site selection decisions, though, you risk ending up with long-term leasing contracts that move your company backwards instead of forwards.
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