The Modern Site Selection Process: 8 Steps to Finding the Optimal Location

Over the past two decades, the site selection process has undergone significant changes due to the availability of new data resources, advanced software applications, global economic growth and increased corporate expansion. Consequently, finding the ideal location for industrial and office projects has become increasingly more challenging across onshore, nearshore and offshore geographies. To navigate this complexity, companies can follow this comprehensive eight-step roadmap to identify the best onshore, nearshore and offshore locations for their expansion.

Step 1: Assemble the project team

First, form a project team that encompasses representatives from various departments, including the executive team, business unit, real estate, logistics, tax, human resources and external site selection consultants.

Step 2: Define project requirements

Each project type demands distinct requirements. Whether it’s a manufacturing plant or a call center, the project team should collaboratively identify key factors such as timelines, required skills, projected headcount, labor rates, capital investment, accessibility, real estate needs and infrastructure necessities.

Step 3: Conduct geographic filtering

To filter locations effectively, the team should collect comprehensive data and build a filtering model aligned with the site selection criteria. Variables such as population, demographics, unemployment rate, cost of living, utility costs, industry presence, logistics costs, wage rates and tax rates help narrow down the initial list to a manageable number of cities. However, decisions should not be made solely based on this level of data.

Step 4: Perform in-depth analysis to identify finalists

Next, the team conducts an extensive analysis of the shortlisted locations to identify the finalists. This involves examining workforce, infrastructure, logistics, business climate, economic incentives and real estate conditions. Detailed demographic data and primary research play a crucial role in creating site selection models. The team uses a balanced scorecard approach, comparing quantitative and qualitative factors like labor market scalability, demographics, labor quality, labor costs, utility rates, competition, real estate costs, cost of living, business environment and logistics to identify two to three top locations.

Step 5: Site visits to finalist locations

Upon agreeing on the shortlisted cities, the project team embarks on site visits for thorough community due diligence. During these visits, lasting one to two days for domestic locations and up to a week for international ones, the team meets with community leaders, economic development officials, workforce representatives, local employers, utility providers and real estate sites. Gathering anecdotal evidence is essential for understanding the qualitative differences between the finalist locations.

Step 6: Initiate negotiations

After the site visits and the identification of finalists, the team begins simultaneous negotiations for economic incentives and real estate terms. Careful control of the negotiation process ensures maximum leverage and avoids conflicts between securing real estate and economic incentives. Discussions with local and state leaders confirm the availability of incentives such as tax credits, grants, training subsidies and utility rebates. Additionally, negotiations with real estate representatives cover factors such as space requirements, rental rate or purchase price, improvements and more.

Step 7: Construction

Once economic incentives and real estate terms are secured, the team focuses on the construction phase, ranging from greenfield sites to existing buildings. Detailed budgets and schedules are developed, and qualified vendors such as architects, engineers and general contractors are selected to ensure the project is delivered on time and within budget.

Step 8: Economic incentive compliance

One often-neglected step is economic incentive compliance, which is crucial for accessing the promised benefits. Typically, companies are required to submit various data, including payroll reports, training expenses, capital investment and tax information, to the relevant economic development and government entities on a regular basis. Failure to comply can result in the loss of incentives.

Conclusion

The contemporary site selection process presents challenges that make self-performing the task risky for companies. To mitigate these risks, organizations should seek experts with global location intelligence, sophisticated evaluation tools and hands-on experience in various geographies. Following this eight-step guide can help companies identify optimal locations and maximize the benefits of their site selection projects.