The Corporate Site Location Process

Once a corporate site location trigger is pulled, a company often will utilize a team of consultants, accountants, lawyers and real estate brokers to research the best location for the company’s job and capital investment consolidation, retention or expansion and negotiate tax incentives, infrastructure finance and real estate terms.  As local, state and federal government spend Billions on tax incentives each year, a thoughtful and well timed corporate site location process is a critical decision for a company and a community.  The timing of pulling the corporate site location trigger is also critically important.  Substantially planning and negotiations for market research, tax incentives and real estate options is involved in the corporate site location process.  The work involved in the corporate site location process should begin six months prior to a lease termination, job expansion or consolidation or decision to grow into a new market.  Corporate site location projects can be accomplished in a shorter timeframe but most successful effort to map out a company’s growth or consolidation plans needs to be undertaken in a thoughtful and strategic fashion.

A corporate site location project begins with a team of consultants listening to their client—the listening focuses on the competitive threats and opportunities for the company, potential growth plans over a three year timeframe for job retention, creation and capital investment, a market preference based upon a company’s supply chain, workforce needs and potential region market growth.  The true goal of the listening phase of a corporate site location project is the definition of the economic development project- how many high-wage jobs will be retained and created and capital investment made over a three year period and what regions are attractive to the company from a market or supply chain standpoint.

The listening stage is followed by the research stage.  Research is conducted into potential regional locations and states to narrow the focus for real estate and tax incentive negotiations.  Most regions lose corporate site location projects before they are ever contacted about the project.  Research conducted into national, state and regional economic data to identify growing markets attractive to industry, identification of region’s industry strengths through industry cluster analysis and predicting economic success in the future by measuring the impact of economic trends such as automation are important.   Regional infrastructure strengths will also be researched that includes examination of major roadways, traffic congestion, direct flight access through airports, rail lines serving critical industrial sites, and availability of utility access to critical sites.  Complex industrial projects may in fact turn into the development of a complete site plan to identify needed infrastructure and understand the costs for such as project.

Understanding the players in the corporate site location process is critical.  Property owners, neighbors, community leaders, private sector economic development leaders, and state and local public officials all are critical to success of a corporate site location matters.  From a tax incentive standpoint, most larger regions operating with a public-private sector organization focused on economic development.  At some point, corporate site location is a real estate transactions—either buying or selling property.  However, it is vital to gaining millions of dollars-worth of tax abatements, tax credits, infrastructure, Brownfield, workforce and other tax incentives that all real estate transactions are either finalized after the incentives are negotiated or a clause is added to any purchase or lease document that the real estate transfer is contingent upon the receipt of acceptable local and state tax incentives.  This requirement preserves the “but-for” test applied as a matter of law and policy for tax incentives in all fifty states.

Confidentiality and communication are also a critical component to corporate site location.  A news story that a company is considering moving or locating to a new state can create major challenges for the company and communities involved.  Thus, corporate site location consultants demand confidentiality from the company and community until the last possible minute.  Public award of incentives require a public discussion of the company and its plans.  However, the real estate transaction for the company does not require a public discussion.  Thus, corporate site location projects are launched and operated with a project name not a company name.  Confidentiality in a corporate site location project also matters from the standpoint of preventing politics from interfering with a company’s location decision.

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