When it comes to industrial and commercial real estate, a prime location is of utmost importance. If you are looking for a new space for your business, or are considering investing in this type of property, make sure to take into account the surrounding area. In this blog post, we will discuss some of the importance of location in industrial commercial real estate, and even residential property.
Location is the number one factor to consider when investing in industrial real estate. According to Deloitte, From 2019 to 2023, we expect the demand for an additional 850 million square feet of industrial real estate in the United States, led by e-commerce.
Key Takeaways
- Understand the economy, job market, and population trends of a particular area before investing in industrial property or even an industrial building or commercial real estate.
- Evaluate the transportation infrastructure in an area to determine if it is easily accessible by employees and customers/clients.
- Accessibility is essential for an industrial or commercial property. Look at the road network and public transportation options in the area to see how easy it is to get there.
Table of Contents
Location is an essential factor for businesses working in the industrial real estate space, which entails the acquisition, development, management, leasing, and sale of commercial real estate used for industrial purposes. While accessibility and convenience are key when it comes to choosing where to locate a business, other considerations such as market fluctuations and local regulations should also be taken into account.
This blog aims to provide insightful advice on how location plays a role in successful investments when it comes to industrial real estate. From analyzing potential major markets and legalities of different areas to understanding the nuances associated with specific locations, readers will come away with an understanding of why adequate research into these matters can pay rewards.
Factors affecting the location of industrial commercial real estate
Availability of skilled labor
Skilled labor is a critical component to the success of an industrial business, as it requires highly trained individuals who can perform their jobs efficiently and effectively.
When selecting a location for an industrial business, you must consider your current workforce and its ability to perform the tasks required in that particular location. If you currently have a shortage of skilled labor in your area, it may be more cost-effective to establish your new business elsewhere than it would be to hire new employees or train them on-site.
Transportation and access to major highways
The availability of transportation infrastructure is an important consideration when choosing where to locate a business. This includes roadways, railroads, and airports. These factors are very important because they help determine whether or not your customers can easily get from their homes or office space to your store or factory.
In addition, if your customers have a difficult time getting there, they may not buy as much as they would otherwise. Major highways are located near the industrial commercial real estate.
This is because major highways are built with high traffic flow in mind, which makes it easier for companies to move products or materials from one place to another. Furthermore, major highways provide easy access to industrial commercial real estate, which makes it convenient for companies to ship their products or materials using these highways.
The availability of major highways also affects the location of industrial commercial real estate by providing more options for companies and investors who want to invest in these properties. In addition, these highways allow companies to transport their products quickly, which means that they will not have to wait for long periods before they can receive deliveries from suppliers or other businesses that have contracts with them.
Proximity to suppliers and customers
Proximity is defined as being physically close to something, either in space or time. In this case, proximity means that a property is located near a supplier or customer. It can be measured in many different ways, including miles from a supplier, miles from a customer, and even miles from both combined. The closer you are to your suppliers and customers, the better positioned you will be to take advantage of their needs and meet their demands.
In addition to being physically close, proximity also means that your property is in an area with good economic conditions such as good job growth rates. These factors together make it easier for your tenants to find suitable locations for their businesses while still allowing them access to nearby suppliers and customers. More importantly, proximity to suppliers and customers can improve access to raw materials by providing a convenient location for processing, packaging, or shipping. It can also provide better access to markets that are distant from the original location.
Tax incentives and regulations
Tax incentives and regulations are two of the most important factors affecting the location of industrial commercial real estate. Tax incentives are offered to encourage businesses to locate in certain locations.
For example, tax breaks may be offered for investments in research and development centers or manufacturing facilities. These incentives can be used to attract new industries, which will then create jobs and help an area’s economy grow.
Regulations are also important in determining where industrial commercial real estate is located. Regulations can affect businesses by controlling how they operate, what they produce, and how they interact with their employees. For example, if a company wants to set up a shop near a community college campus it might have to follow certain rules on hiring employees who have obtained certain degrees or certifications.
Cost of living
The cost of living is influenced by local economic conditions, such as unemployment and inflation rates, which are usually higher in urban areas than in rural areas. Specifically, the inflation rates increased because of the pandemic. Aside from that, the cost of living varies from place to place and this makes it difficult for an investor to decide where to invest in industrial commercial real estate. This makes sense because businesses depend on consumers to stay profitable.
If consumers cannot afford to buy their products or services, then the company must raise prices to cover its costs, which can cause profits to decline and eventually force them out of business altogether.
The impact of location on the success of industrial businesses
Labor costs and productivity
Labor costs and productivity are the two most important factors in determining the success of a business. Labor costs are directly related to the cost of your labor. You can have the best products and services in the world, but if you cannot produce them at an affordable price, then you will not be able to compete with other businesses.
On the other hand, productivity is the amount of output per hour of labor input. This means that if you have more efficient workers, then you will have higher productivity and lower costs per unit of output.
Location plays a very important role in determining these two factors. If you have high labor costs and low productivity, then it is likely that you will be located in a less efficient area where there are poor opportunities for growth or employment opportunities for your employees (i.e., low wages). If you want to grow your business, then you must find an area where these factors may not be as problematic due to cheaper labor costs or better job opportunities for employees.
Shipping and logistics costs
Shipping and logistics cost impact of location on the success of industrial businesses. As a result, it is important to keep this cost as low as possible. Shipping and logistics costs are important because they determine how much profit a company makes from each item shipped or sold. If you own a retail store and want to ship an order from your warehouse to your customer, the cost of shipping that order will be your margin for profit on that sale.
Unfortunately, shipping and logistics costs are often high in certain areas because there are limited options for shipping products from one place to another and because there are different types of transportation available for those options (such as trucks versus rail).
Access to markets and customers
It’s not just about having a physical presence or being in a particular location. It’s about being able to connect with people who have similar interests, needs, and desires as yours.
So, if you’re starting as an entrepreneur, you must understand what your business needs are and why they matter so much. You will need these skills if you want to grow your company into something big!
The more people who know about your product or service, the better chance it has of succeeding in its market. If you don’t have enough potential customers who would benefit from what you have to offer, then it doesn’t matter how good your product is — there will be no demand for it!
Ability to attract and retain employees
The ability to attract and retain employees is a key factor in the success of industrial businesses. This is because employees are crucial in providing the necessary skills and knowledge that allow companies to grow and develop their products and services.
In addition, employee retention is also important because it ensures that there is a steady supply of workers who have been trained by previous employers, thereby making them more valuable to new employers as well. That’s why, if you want your staff to be happy and productive, then you need to ensure that they have access to good transport links, which means that they can get where they need to go quickly and easily. It also needs to be easy for them to get from home or work back again at the end of their shift – which means somewhere close by where they can park their car if necessary.
It’s therefore no surprise that some studies have shown that companies with high levels of employee satisfaction tend to perform better than those with lower scores.
Environmental and sustainability considerations
Environmental assessment for issues is becoming increasingly important in all industries, but they are especially important in industrial sites. Industrial businesses produce large amounts of waste and pollution, which can have serious consequences for human health and the environment. To minimize these effects, companies must make sure their operations are environmentally friendly. It also affects not only how you do business, but how your customers and employees view you. A company that cares about environmental safety will have an easier time attracting customers and employees who share its values.
That’s why it is important to think about sustainability as having a long-term vision for your company and its impact on the world around you. It doesn’t just mean reducing waste, but also increasing social responsibility and helping others. The environmental impact of your business can be measured in many ways — from energy consumption to water usage, from greenhouse gas emissions to waste generation. If you’re not thinking about this, it’s time to start thinking about how you can make your business more sustainable.
Strategies for choosing the right location for industrial commercial real estate
Here are some strategies to help you:
Conduct market research
Market research helps you to identify the best location for your business by checking the availability, accessibility, and potential demand for your product or service.
The most important part of conducting market research is knowing your customer well enough to understand what their needs are. This will help you choose an appropriate location for your business because it will ensure that you are serving them directly as opposed to making them pay for something they don’t want or need.
Market research can be conducted via surveys, focus groups, or interviews with potential clients or customers who live in a particular area. These surveys need to be done carefully so that they are not biased toward one particular kind of consumer or business owner. Conducting market research can be very expensive if done incorrectly but it’s well worth it if you want to know exactly how people feel about where they live, work, and play in their community.
Evaluate transportation and logistics options
In this strategy, you need to consider the availability of transportation and logistics infrastructure in your area. You can use data like population, job growth, traffic congestion, road network, and other information to evaluate these two factors. You can also look at the number of freight vehicles and their capacity within your city.
The second factor is access to ports and airports. It is important to have an airport near your business premises so that you can fly in employees from all over the world easily. A good port facility will help you import goods from different countries without any hassle or delays in transport.
Assess the local business environment
The local business environment refers to the physical, political, and social characteristics of a particular area. These include the types of businesses that are available in a community; whether or not there are regulations that restrict new businesses and whether they have a healthy business climate.
The main objective of this strategy is to choose an area where there will be enough demand for industrial commercial space to justify expanding existing operations or building new facilities. This involves identifying factors such as population growth, economic development, and transportation options.
Consider tax incentives and regulations
Tax incentives and regulations are a major factor in choosing the right location for industrial commercial real estate. A tax incentive is a program that offers financial incentives to businesses in exchange for specific actions that lead to economic development or job creation in an area. There are many different types of incentives offered by different states, cities, counties, and municipalities.
In addition, there are certain regulations when you do business. Regulations are rules and laws that govern how businesses operate and how they can conduct business. They often include requirements for safety, health, environmental protection, and other matters related to business operations.
Regulations can be imposed by government agencies or by industry groups such as trade associations or professional organizations. They may also be included in contracts with tenants or landlords.
Factor in the quality of life considerations for employees
Quality of life considerations are important to businesses because they foster employee retention, which is one of the most important factors in determining success. When choosing a location for your next industrial commercial real estate project, make sure you consider the impact it will have on your employees’ quality of life.
Employees who live in areas with poor air quality may be more prone to health problems and even early death. The same goes for working conditions that aren’t safe or comfortable, such as those found in high-crime areas or near toxic dumps.
If you want to know more about the importance of location in CRE, I have written an article about the Importance of Location in Industrial Commercial Real Estate, this will help you understand the importance of finding the right location for your business. I hope this will be helpful and has given you some guidance in choosing the right industrial real estate option for your needs.
The importance of location in industrial commercial real estate FAQs
What makes location important in industrial commercial real estate?
Location is a critical cornerstone when it comes to industrial commercial real estate. Logistics such as highway proximity, airports, and other means of transportation are essential factors that must also be taken into account – not only for cost savings potential but improved customer service too! When all these aspects come together… location becomes an irreplaceable keystone of business success.
What factors should be considered when choosing the location for industrial commercial real estate?
When selecting the ideal location for an industrial commercial real estate project, several important factors must be taken into account. Transport links are of primary importance; having easy access to highways and airports means products can reach their destination quickly and economically. Additionally, you must have a reliable source of competent labor nearby should staffing demands suddenly rise or in times when resources become scarce. Last but not least is ensuring you comply with all zoning regulations – consulting with a knowledgeable real estate expert can help ensure your plans meet these requirements!
How does location impact the success of industrial businesses?
When starting an industrial business, location is key to achieving success. It can provide many advantages like easy access to transportation and shipping infrastructure which lowers overhead costs while connecting customers conveniently – or it could be a serious handicap if placed in an isolated area where resources are scarce and essential services (such as customer service) suffer as the result of inadequately skilled labor.
Local laws may also make certain operations impossible so businesses must consider all these factors when choosing their headquarters for optimum results from their venture.
What strategies can be used to choose the right location for industrial commercial real estate?
Finding industrial commercial real estate for your business is a complex process full of decisions to be made. From the economic prospects in an area and local infrastructure to zoning regulations, environmental considerations, existing tenants, and more – businesses need to assess their options carefully when evaluating potential locations.
With thorough research into all available factors influencing land suitability within a certain region – such as size requirements or access concerns – decision-makers can then make informed choices that ensure any chosen location will meet their needs effectively moving forward.
How can businesses ensure they are making the right decision about the location for industrial commercial real estate?
When it comes to industrial commercial real estate, taking the wrong decision on location could be costly. Seeking out a trusted expert in this field can help businesses make an informed choice that meets their needs and avoids potential pitfalls.
Conclusion
The location of your industrial business can have a significant impact on the success or failure of the enterprise. When making real estate decisions, it is important to consider factors such as tax incentives and regulations, proximity to suppliers and customers, and cost of living. With so many factors to weigh, choosing the right location for your business can be daunting.
However, with careful consideration and expert guidance, you can make the best decision for your company’s future! At Toljcommercial, I offer free consultations to help businesses choose the perfect location for their needs. Schedule a consultation today to get started on finding the ideal location for your industrial business.
