For many companies, the idea of relocating or establishing a new location within any market can be difficult, but overcoming these challenges overseas can be daunting. Ensuring that the process is done correctly – that the key stakeholders have been involved, all
criteria are identified and analysed, and your company has received the maximum value for its investment – can make the difference between success and failure at the enterprise level.

When a company seeks to relocate, it typically makes the mistake of focusing on finding the appropriate property. This is often true if the site selection process is being driven at corporate level. However, selection of the property can often be the third or fourth step when
considering a relocation or establishing a new location.

Furthermore, while property is a large percentage of every organisation’s costs base, there are many other key “success” factors that need to be considered prior to selecting the site. Many of these factors will differ in definition and importance according to the needs
of the business.

By applying a strategic planning methodology to location selection, a company’s site can be more closely aligned with the company business plan.

There are four key phases in a typical location analysis process:

1. Project initiation and objective setting
2. National/regional/city selection
3. Analysis of short-listed locations and community tours
4. Implementation, negotiation and construction

PHASE 1: PROJECT INITIATION AND OBJECTIVE SETTING
This is the most critical step as it determines the key business drivers for the location selection process. It is important that key stakeholders are involved at this stage. We recommend the creation of a Steering Committee, which typically includes location executives and other stakeholders and decision-makers, such as human resource teams, information and technology teams, finance teams, and key business unit heads.

The project objectives and macro criteria relevant to the location strategy are often determined through guided brainstorming sessions that can have a secondary benefit of building common objectives from different stakeholders in the business. This exercise will also ensure that creating a new location or relocating an existing operation is the correct business decision to implement.

Once the objectives of the overall project have been identified, time frames and project plans are defined. Information regarding existing property within the company would be gathered at this time to identify potential constraints (for example, long-term lease obligations) and/or opportunities (for example, collocation synergies) within the current portfolio, and ultimately an exit plan, if required.

Communication is an essential process in projects such as these and can often be a potential pitfall if not managed and guided appropriately. The methodology applied to communication is very project specific; however, an external consulting resource is often helpful in managing this process. To ensure early communication and staff buy-in, a staff communication policy can be formulated
during this phase, especially if the project requires international relocations.

PHASE 2: NATIONAL/REGIONAL/CITY SELECTION
During this phase, the process of identifying the micro criteria commences. This is typically defined through a series of interviews and questionnaires to formulate a profile of the appropriate micro drivers and their respective weighting. The weighting will be defined in accordance with the company’s business plan.

Initially, a geographic scope would be defined (for example, a firm may decide to establish a European location). Once the geographic scope is defined, the micro criteria would be used to narrow the scope of the search. These can include image, labour cost and
accessibility, language skills, move costs, tax breaks and other incentives, proximity to transportation, phasing of a move, among others. Cities or regions are then identified and evaluated according to the weighted importance of the micro factors. Labour availability and cost is a standard micro criterion that is weighted heavily in a location strategy, and often one that is considered too late in the process. Consideration must be given to issues such as travel times to work, available travel networks and public infrastructure. Each of these factors also has an impact on the retention and severance rates of existing employees and hence the cost of potential redundancies. These factors would also be built into the model to evaluate respective locations.

Once the markets are modelled, a refined short list of suitable locations is established.

PHASE 3: ANALYSIS OF SHORT-LISTED LOCATIONS AND COMMUNITY TOURS
Following the quantitative research of the previous two stages, this phase commences with a detailed analysis of the specific locations. Community tours and site visits would be included in this stage. This allows the Steering Committee or key decision-makers to understand the specifics of the labour market, real estate, connectivity and other key items associated with the success of the project.

During this phase, a detailed analysis of the relocation of existing labour would be undertaken (if applicable) and the preliminary recruitment campaign would be initiated. Companies seeking to hire a large number of candidates or candidates with specific qualifications would meet with recruitment firms to determine if qualified candidates existed within the specific market place. Other relevant employers may be interviewed at this stage to determine overall satisfaction with a specific location.

Once on-site tours have taken place, specific buildings would be considered and an analysis would be conducted for each building. This would include a full cost analysis, viability, and a pros and cons report. The buildings would be ranked in the final selection
process.

During this process, companies and their consultants would meet with local governments or economic development agencies to determine the level of aid, grants, incentives or tax schemes that may be available within a region. These incentives can have a dramatic
impact on the overall cost of a location. However, the process of gaining Regional Selective Assistance and Grant Aid within the EU, and securing Statutory and Discretionary incentives in the US, has several pitfalls, including claw backs and other commitments that can
disguise the medium and long-term risk of accepting some incentives. A consultancy-based approach is recommended to secure the highest value of incentives with the lowest proportion of risk to the enterprise.

The conclusion at this stage is to identify a single preferred location.

PHASE 4: IMPLEMENTATION
At the initiation of this phase, a summary of the findings including an audit trail of approved and rejected options would be created. Typically, the Steering Committee would reconvene following the site visits to agree on the ranking of appropriate buildings within the selected location.

Once a number of buildings have been identified, a negotiation strategy would be established and discussions with the landlords/developers would commence. Space planning and design work would be undertaken at this stage to determine optimal
layouts and occupancy patterns. Final budgets are often authorised during this stage as final costs are realised.

Once the final legal transaction has been completed, build-out and construction would commence and telecommunications infrastructure would be established. At the same time, staff communication regarding potential relocations would be initiated.
In addition, training grants and economic incentives would be secured at this stage.

The last stage is for the company to finalise its transition plan and occupy its new premises.

For further information on site selection needs, please contact:

Sue Asprey
Director, CBRE
1a Wimpole Street, London, W1G 0RE
Tel: +44 (0) 207 182 2797
E-mail: sue.asprey@cbre.com

Darcy Frank Kotun
Senior Managing Director, CBRE Consulting
101 California Street, 44th Floor, San Francisco, CA 94111
Tel: +1 415 722 0249
E-mail: darcy.kotun@cbre.com