Are you a “glass is half-full,” or a “glass is half-empty,” type of person? Most local economic development people I know fall into the half-full category, and for obvious reasons. They are, as a group, optimistic people because their job is to help strengthen the local economy by helping businesses grow and be successful.
Their mission is to secure the future of the community by making sure that good jobs are there for both current and future townspeople.
Their job is to sell their community. Most do it extremely well. Unless, that is, it conflicts with their gut instinct that vacant buildings represent failure, rather than opportunity.
First, let me backtrack just a bit. What many folks involved in economic development often seem to forget is that, depending upon whom you ask, somewhere between two-thirds to three-fourths of all business expansions and relocations end up choosing an existing building for their new operating facility.
In other words, these companies find vacant real estate and, after a certain amount of retrofitting, move in and start operating. Sure, some companies find a greenfield site and start building from scratch, but most don’t.
| What’s wrong with this picture? Here we have communities sitting on a wealth of product (vacant commercial real estate) at attractive prices and they’re ashamed to admit it. Are they nuts? |
Why? Time and money.
Most companies engaged in the process of identifying the best location for a new facility want to be up-and-running as quickly as possible — yesterday if possible.
After all, businesses requirements are driving the process, not mere whimsy or a desire for a change of scenery. Each day that passes before the new facility is operational is costing them money. They’re in a hurry and being able to move into an existing facility saves an enormous amount of time in terms of permitting and construction.
It also saves businesses a lot of money as well. Clearly, sometimes it’s easier to build from scratch than it is to try to convert an existing structure to accommodate a company’s specific needs. This is particularly true with technology-driven companies.
For most companies, though, an existing building will meet their needs. That’s why so many of them choose this path.
Why is it then that many community chambers of commerce and economic development organizations are reluctant to admit the fact that they have empty buildings? Every year, when we publish our list of the Top 40 Real Estate Markets, I talk to all kinds of economic developers who are embarrassed by the fact that their community has vacant office or industrial space, or that high vacancy rates have driven the lease and purchase rates down to bargain basement prices.
What’s wrong with this picture? Here we have communities sitting on a wealth of product (vacant commercial real estate) at attractive prices and they’re ashamed to admit it. Are they nuts? Imagine an empty hotel that refuses to put up a “vacancy” sign because the owners are afraid potential customers will think there’s something wrong — and you have a pretty good picture of what I’m talking about.
While an empty building represents a problem for the owner of the building (who desperately needs a tenant or buyer), it also represents an opportunity for a community trying to attract new companies that will, in turn, provide new jobs and added tax revenue. Don’t forget, most professional site location consultants will tell you that somewhere between two-thirds and three-fourths of all business relocations end up in an existing building.
If this isn’t a win-win-win situation for everyone involved, I don’t know what is.
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