All sorts of questions are examined during an expansion or relocation: Where are our customers? Is the transportation adequate in the areas we’re looking at? Are there available, quality workers? What kinds of incentives are offered?

Pursuing these questions is vital, but don’t forget about the land side of the equation. 

Wherever you decide to locate your company, you have to touch down on a piece of property. It’ll be either a patch of land with nothing on it where you will pay to construct a new building, or an existing building that you will occupy.

Expansion Management Magazine, with the help of data from two of the nation’s largest real estate companies, ranked American cities on several real estate issues: rental and purchase price, per square foot, for warehouse space; rental and purchase price, per square foot, for downtown and suburban office space; rental price, per square foot, for standard industrial and R&D space; vacancy rates for suburban and downtown office and industrial space; and housing affordability.

The result is the “America’s Top 40 Real Estate Markets” ranking on page 12. 

The data comes from the National Real Estate Index, compiled by CB Richard Ellis, and from Grubb & Ellis’ Office Market Trends and Industrial Market Trends. CB Richard Ellis is headquartered in Los Angeles, and has 200 offices in 29 countries. 

Grubb & Ellis, based in Northbrook, Ill., has offices in 87 markets in the United States. 

The company’s international headquarters is in London.

The rankings measure two of the more important components of real estate, price and availability — issues that firmly hit the bottom line. Savings in rent or purchase prices can translate into more profits, which is critical since you’re already spending money to expand.

Availability is key because of the swift movement of business today. Companies want to plan carefully and cover all the bases when expanding, but they also want to be up and running as soon as possible. A community with plenty of space for sale or rent, along with a low cost, is going to be attractive to expanding companies.

The Results Are In To no one’s great surprise, most of the cities near the top of the list are in the South and Midwest. Cities like Oklahoma City (No. 1) , El Paso (No. 3), and Birmingham (No. 6), all offer property at rates lower than the rest of the country, with available space  to boot.

The South, however, doesn’t have the market cornered on good real estate news. Cities such as Philadelphia (No. 35), Milwaukee (No. 30), Baltimore (No. 39) and Detroit (No. 40) all made the list as well. While a company may pay more for real estate in these areas than in, say, Oklahoma City, these cities can still offer unique advantages.

Although property prices there may not be of the bargain basement variety, they are reasonable. And reasonable property prices coupled with other factors such as transportation may give you new direction in your site search.

The Greater Cincinnati, Ohio, area (No. 19), which also includes northern Kentucky, is a good example. Of course land in the area is available at a reasonable price. But when companies look closer, they find out the area has much more.

The Cincinnati Airport was ranked second in the world, according to ACNielsen, in a survey of 50,000 business travelers for customer service and friendliness, behind only Singapore. Executives can get non-stop flights to London, Brussels, Zurich and other locations from middle America.

In Birmingham, Ala., companies attracted to the city by its land costs and availability will notice it is the second-largest banking area in the South, behind only Charlotte. The auto industry has also noticed Alabama, with Mercedes-Benz and Honda recently opening new facilities in the state.

“We do have a quality product,” said Ted vonCannon, president of the Metro Economic Development Board in Birmingham.  

Telephone company hooks up in Richmond

Cavalier, which competes in the local telephone market with Atlantic Bell, started in May with 60 employees and has since grown to over 100 workers. The company plans  to employ over 200 by the end of the year. Cavalier took a vacant  building and renovated it, spending $50 million.

“The city had a specific investment at a specific price that met the company’s needs,” said John Woodward, marketing manager for the city of Richmond, which ranked ninth. In the Hampton Roads, Va., area, Norfolk made the list at No. 15. The area’s quality of life often attracts companies, and they find that locating a spot for their business can be affordable.

“With the areas we compete with, we stack up very well,” said Fred Paris, vice president of marketing for the Peninsula Alliance for Economic Development.

Low-cost Carolina entices companies North Carolina has long been known as a low-cost state for businesses. Most often, low labor costs and a favorable tax structure steal the headlines. But cities across the state are using another marketing tool — available real estate at a reasonable price.

North Carolina cities in the Top 40 are Greensboro/Winston-Salem (No. 5), Raleigh-Durham (No. 24) and Charlotte (No. 28).

“You must have a product to sell, a place to do business,” said Bob Leak Jr., president of Winston-Salem Business Inc. “Incentives and tax rates are all important, but a business must still be able to find a place to conduct their operations.”

The low cost of real estate allows locations in North Carolina to concentrate on other factors in a company’s decision.

“Let’s put it this way: No one has ever not come because of a real estate problem,” said Mark Heath, president of the Carolinas Partnership, which covers 15 counties and includes the city of Charlotte. “It’s part of the overall cost of doing business, which we push hard.”

Scattered hot spots

“We’re competitive with anyone on real estate prices,” he said.

In Tampa (No. 23), the city recognized the need to have a supply of facilities for prospective companies. Several old malls in Tampa have been converted into office space. GE now employs 700 people at a customer service center in a former shopping center.

New office space is also popping up, with build-to-suit projects especially popular in the area.

Milwaukee, at No. 30, is welcoming a 160,000 square foot Alterra Health Care Corp. headquarters building in the Milwaukee County Research Park. Alterra’s facility is the largest corporate headquarters facility in the Milwaukee area in the last decade, said Guy Mascari, director of development for the park.

The park, a 175-acre project, has three occupied buildings and two under construction. “We’re looking for technology companies,” Mascari said. “The main attraction for technology-based companies is other technology-based companies. You get clusters of these types of operations.”

Haste Makes Waste While availability can benefit your company by fostering a quick move, don’t race ahead blindly.  Selecting the right site for a relocation or expansion isn’t like getting new office furniture. This is a decision that is one of the biggest your company will ever make. You won’t likely get a do-over if things don’t work out. Balancing the need for good planning with the desire to get going quickly is tricky, but it can be done. “I’m a firm believer in the more time you have to plan, the better, period,” said Tom McCarthy, senior vice president with Staubach and Co., a real estate firm based in Dallas, Texas. “If you are talking about a greenfield site, I think you should give yourself a year for all the necessary infrastructure improvements, then 90-120 days to design and then five months to build. All told, it’s close to a two-year process.”

While two years may sound like an eternity if you are expanding, wise use of that time can pay off in the long run. 

“You have an opportunity to look at the entire market,” said McCarthy. “In terms of incentives, abatements and also time to generate competition ... within a given city or multiple cities or states.”

John F. Anderson, who runs his own consulting company in Los Angeles, is no stranger to locating real estate. For 11 years he worked as vice president of real estate for FOX, the media and entertainment giant. Anderson has helped acquire real estate in all corners of the globe, and he agreed that time is critical to any decision.

“You have to understand a corporation’s schedule,” said Anderson. “Is it purely an investigative approach, a limited schedule or unlimited? There’s a lot of difference among those op-tions. I always ask, ‘Do you want this right this second.’” If a company is not working on a strict timetable, it can usually negotiate a better deal.

No need to reveal everything.  While your company may know exactly why it wants to expand or relocate, it’s not necessary to share that with everyone you meet. Your sole purpose in moving may be to reduce operating costs, and real estate may be a way to do that.

“I don’t try to figure out the decision-making process of a corporation,” said Anderson. “Nor am I going to think for the client. I can provide them with information, but they have to know what they want to do.”

A company’s long-term goals can dictate whether it will buy or lease, or the types of incentives a company can realistically scout around for in prospective sites.

“I just try to work within the parameters the company gives me,” said Anderson.” As examples, Anderson pointed to Rockwell and Lockheed Martin. Both companies relocated their headquarters because of real estate incentives available on new property. 

Savings for the long haul With so many local governments offering incentives to prospective businesses, how can you differentiate among the crowd? Real estate is one way.  A job growth tax credit may be nice to begin with, but will your company be viable in this location, 15 or 20 years down the road? “Companies are looking at the bottom line,” said Clarence Hulse, senior development manager for the St. Petersburg/Clearwater Area Economic Development Agency in Florida. “Incentives can offer short-term cost breaks, but real estate is a long-term cost saving measure. The incentive may disappear after a number of years, but the piece of ground is always with you.”