When a business owner wants to relocate, the task can seem daunting. However, by exploring some key considerations, you can prioritize the move and find a location that works well for your present company and your future growth.
One such location — Irving, Texas — is in the Dallas-Fort Worth Metroplex. Irving has more than 8,500 businesses that are already operating in the region, including the headquarters of five Fortune 500 companies.
“You need a value-driven proposition,” says Carter Holston, general manager of Real Estate NEC Corporation of America. “You have to have a good location. You have to have a great office space. You have to have access to your employees and pay the right amount of tax, both school and other. All that goes into the mix when you make the decision.”
Smart Business spoke with Holston about what employers need to consider for relocation and why the Greater Irving-Las Colinas area fits that bill.
If a business is thinking of relocating to a new city, what does it need to take into consideration and how does that relate to the Irving area?
There are three components that any company needs to consider:
- The work force
- How you access the work force, the accessibility to the region, and how you move about via the roadways and mass transit
- The business-friendly environment
Irving is in the center of the Dallas-Fort Worth Metroplex, so access to an available work force is not a problem. The area is adjacent to a major airport — the Dallas/Fort Worth International Airport — allowing you to get your people in and out of the city in an easy and efficient manner.
The Irving area also has accessibility from the standpoint of mass transit, which is a game changer in business today. The new work force is more mobile and prefers living, working and playing in the same area instead of driving long distances to and from work.
Then there’s the business-friendly environment, which is probably one of the most important factors. Companies need to be in cities that believe in business, that understand the revenue they derive from taxes and what it means to have their citizens employed.
What’s the current state of the commercial real estate market in the Irving area?
Commercial real estate for Irving is on the rise, generally, and Texas, itself, is a good market for companies and corporations to consider relocating to.
Irving has more than 30 million square feet of commercial office space and is the third-largest submarket in the Dallas-Fort Worth Metroplex. Typically, there is about a 20 percent vacancy rate, but that has been as high as 25 percent, so Irving is a value-driven market.
With 30 million square feet, there are some large blocks of space that are available at affordable rates. Most companies seem to be taken aback at the leasing rates in Dallas compared to other regions.
Irving also has another game changer that just opened in July — a light rail system that runs through the central urban center. That mass transit will affect commercial real estate in a positive way in Irving.
What else makes the North Texas region so attractive?
Texas, in general, and the Dallas region, in particular, are ‘can do’ regions. There’s really no reason for Dallas to be on the map. There’s no geographic reason for Dallas to exist, no great river system. However, the people who settled here on the prairie a long time ago made it work, and that theme and attitude have carried through the years. Even when the oil business was not good, Dallas found a way to diversify and found other industries to attract, such as technology, oil and gas, banking and insurance. Just about every sector of the economy is represented in North Texas, and the Dallas area specifically.
This ‘can do’ attitude holds true for the area’s longevity and its future, which is based on finding a way to get things done.
How can an employer find things such as tax breaks and incentives when moving into a new area?
First, look at what is important to you. There are a variety of tools that each region and city has to offer. The tax breaks, in and of themselves, shouldn’t make the decision for you. The decision to relocate should be based on where you can get a fair deal — where the value deal is found.
That said, for new construction, there are many incentives available, varying greatly by city. You should have a good broker representing you who has access to incentives and knows what has been granted in the past. You should be represented well and compare with past incentives, but don’t let incentives be the only thing that makes up your mind.
The Greater Irving-Las Colinas area is certainly very affordable with available space and incentives, but it’s also a great product in a business-friendly area.
Carter Holston is general manager of Real Estate NEC Corporation of America, where he oversees all domestic commercial real estate functions and is responsible for more than 1 million square feet of leased and owned facilities. In addition, Holston serves as a consultant to the Irving Economic Development Partnership at the Greater Irving-Las Colinas Chamber of Commerce. Reach him at (214) 262-2190 or firstname.lastname@example.org.
Visit the Greater Irving-Las Colinas Chamber of Commerce at www.irvingchamber.com.
Insights Economic Development is brought to you by Greater Irving-Las Colinas Chamber of Commerce
When Steve Jones, founder of Homeland HealthCare, was looking for a new home for his rapidly expanding business, he considered many locations around the Dallas/Fort Worth Metroplex.
But although other cities made generous offers to attract the business – a national third-party administrator and managing general agency that specializes in servicing a variety of health and wellness products -- it was Allen, Texas, that easily won the day, says Jones.
“The Allen Economic Development Corporation was very aggressive,” says Jones. “In 2009, we were still at our previous location but we were growing so quickly, we needed a new space. Our previous city wanted us to stay at that location, and two others offered us incentives to move to their cities, but Allen beat them all. They were really aggressive, they offered a lot more, they took the time to come over and meet us and learn about our business, and they were a lot more interested in having us than anyone else.”
Smart Business spoke with Jones about his decision to move his company to Allen and why the city is such a great location for doing business.
What played into your decision to move Homeland HealthCare to a new location?
Although the company was founded in 1997, it wasn’t until 2001 that we started offering discount vision, dental, prescription and medical benefits through employer groups. Then people started asking for more. We had never done major medical, nor did we want to get into it, but we came across a fixed indemnity product that was gaining a lot of acceptance in the marketplace, especially for those who didn’t have major medical available from their employer.
That precipitated our growth until, by 2009, we had a combined 14,000 square feet and 57 employees. As we continued to grow, it was time to find a new location to accommodate that growth.
How did you settle on Allen as the new location for your business?
Once we had outgrown our space, we had a tenant representative go out into the marketplace and give us some options. There was a lot of space and a lot of empty buildings available to us at that time. We looked at locations in several cities but found a really great location in the Watter’s Creek Development in Allen. The development is a multiuse real estate plan that has apartments, retail, restaurants and offices and that looks like a little town. It’s a really great concept, with lots of cool places to eat and lots of retail complexes.
From an employer standpoint, my employees would have places to eat, they would have places to shop and they would have places to live if they wanted to be in this area. And we have covered parking. You’d never have to leave.
Other spots that we looked at just had a building and it was the same dollars for this as compared to buildings on the Dallas Tollway, where there’s no place to eat, no place to shop, there’s nothing. And there was no covered parking. You would walk outside and get into your steaming hot car. It would have been horrible.
It wasn’t a difficult decision to make. As an employer, I need to look for reasons for people to want to come to work at my business, other than just pay and benefits, and it being a great place to work. Our location gives us an advantage in attracting the best employees, I believe.
Since we moved here, our growth has been extraordinary. We built 23,000 square feet initially in 2009, and knowing that our growth was off the charts, since then we’ve built out another 7,000 feet, to reach 30,000 square feet. And in three years in this space, the number of employees has increased from 57 to 160.
What advice would you give to other business owners considering moving their companies to Allen?
If you are considering a move, meet with the people at the Allen Economic Development Corporation and give them an opportunity to show you what Allen has to offer. There is a really good work force around here, a very educated, hardworking work force for companies to draw on, housing is very affordable and the schools are excellent.
I would have no reservations about recommending the people at Allen Economic. They are very easy to work with and they are pretty aggressive. They’re very good at communicating with you, getting you involved in the community and, from an incentive standpoint, they beat everyone else when we were looking at a move. And they are very easy to work with.
There’s a lot of competition for business in the Metroplex, and Allen competes very well. It doesn’t have a big name like some of the other cities in the area, but given the opportunity, I think that any company would be very pleased dealing with the people in Allen. I certainly know that we have been.
Steve Jones is founder of Homeland HealthCare. Reach him at (214) 871-2118 or email@example.com. Reach the Allen Economic Development Corporation at (972) 727-0250 or www.allentx.com.
Industrial site selection involves so much more than just the cost of real estate. Brandon Podolski, partner and industrial sector leader at Plante Moran CRESA, stresses the importance of taking many factors into account before considering a real estate transaction, regardless of whether it involves entering a new state or moving to a neighboring city.
“Too often, when companies are expanding or consolidating locally, they spend 90 percent of the time looking at the lease rate or real estate costs and don’t account for the impact on operations, labor, cost of goods sold, expenses, taxes and supply chain, or investigate all available incentives,” says Podolski. “These are just some of the components we analyze in a national site search, and they also make an impact on a local scale. Whether leasing, buying, or building, this is more than a real estate deal; it is a business decision that requires due diligence and thoughtful analysis. An experienced adviser can identify and evaluate all of your options and develop a real estate strategy that is closely aligned with your business plans and goals.”
Smart Business spoke with Podolski about creating a competitive advantage through an informed and professional approach to site selection.
How should a business approach site selection?
Companies with multistate operations will commonly analyze the cost benefits of prospective locations in terms of labor, logistics, taxes, incentives, utilities, real estate and other location specific factors. Each of these variables can impact the true cost of conducting business at a selected location. Being proactive can make a sizeable difference.
Can you expand on the critical factors of national site selection?
Logistics plays a key role in selecting the best location. When you think logistics, the first thing that comes to mind is transportation; however, that is just one component. Logistics is the planning and execution of efficient and effective flow and storage of all goods, services and related information to meet customer requirements. Analyzing your existing customer and supplier base and how it ties into a location decision and impacts operations, cost and timing can be a prominent factor in where to locate. Businesses should also examine where they procure raw materials in determining the best location for expansion or new investment.
Transportation costs remain an important consideration in location strategy. It’s important to understand freight requirements before deciding on a specific site to ensure necessary access to interstates, rail and airports, as appropriate, as a location many miles from the main interstate is not conducive to an operation heavily reliant on truck shipping. Modeling how these costs will change based on proximity to suppliers, warehouses and customers is an important consideration.
How can taxes and incentives influence decisions?
State tax structures and incentives are one of the primary items in national site selection. Rates for franchise, and real and personal property taxes can differ significantly from location to location. Corporate income tax structures vary greatly, as well, and some cities have an additional payroll or inventory tax. Some states are more willing than others to offer tax abatement programs, sometimes specific to an industry such as advanced or high-tech manufacturing.
It’s important to conduct detailed due diligence to determine what the tax impact will be on your business and leverage any applicable state and local incentive programs. Many states have an economic development staff that can offer creative programs to help make locating in their state more affordable. Having a trusted adviser in your corner, one who is committed to your success, can be very valuable in this regard.
What part do labor costs play?
Labor costs and availability are significant factors in site selection, and they vary widely across the country. A great incentive package does not necessarily mean the best business decision if it leads you to an area where the pool of employees does not match the skill sets your organization needs or its projected growth. Industrial organizations need to look at their requirements for engineers, highly skilled employees and general labor compared with salary rates and availability for each prospective location. Also, if you are a large user of energy or water, compare the cost of utilities across markets. Water rates are significantly higher in certain states and need to be factored in the analysis. Negotiating utility costs is an often-overlooked strategy.
How does this strategy apply to businesses looking to relocate or expand locally?
Understanding the best practices of national site selection allows companies to look at local real estate transactions differently. The more factors about potential sites you arm yourself with, the more information you have to make a smart business decision and gain a competitive advantage. Working with an adviser when you have a new project or are in the quoting stages can give you the time necessary to conduct a thorough analysis of all options.
Comparing variables not specific to the buildings can tell you the true cost of a location beyond the price of real estate. Analyzing local property tax rates and location-specific incentives provides another perspective to a local real estate transaction. Comparing logistics costs and the proximity to customers and suppliers are also key components. While utility rates may not significantly differ in a local transaction, the energy usage and efficiency of facilities can be estimated based on roofing, windows, lighting and HVAC equipment.
The bottom line is that choosing a location based solely on where real estate costs are the lowest can cause other factors to become unaligned. That’s when market knowledge and a disciplined approach to the selection process become critical, even when assessing locations within a small radius.
Brandon M. Podolski, JD, is a partner and industrial sector leader at Plante Moran CRESA. Reach him at (248) 223-3245 or Brandon.Podolski@PlanteMoran.com.
When Frontier Communications recently made an acquisition, it was left with a dilemma.
The lease on a regional office it had inherited was expiring at the end of 2011, and it needed to move that facility, which housed nearly 500 employees in Dallas. Second, the company requires that 100 percent of its calls are answered in the U.S., mostly by employees, and it wanted to hire another 150 people to answer calls in house, says Cecilia McKenney, executive vice president, human resources and call centers, with Frontier Communications.
“We needed to find another location to scale up to be ready to in-source these calls,” says McKenney. “We looked at many centers in multiple states. And in looking at the dual objectives of finding another location for our Dallas office and the expanded call center needs, the Allen Economic Development Board team convinced us that we could start a call center in Allen with the right work force availability, the talent in the workplace and their support, which led us to the decision to choose Allen.”
Smart Business spoke with McKenney about how an economic development board can play a role in your company’s relocation and the factors to consider when making a move.
How can an economic development board factor into a company’s decision to relocate?
I have met with many economic development boards over many years of looking at real estate options. Many boards say they are going to do this and this and this, but when you ask them the third and fourth questions, it begins to fall apart. Ask for examples. Ask, ‘How are you going to do this? Give me details on how you’re going to help us do that. What are terms with which we will get this incentive?’
When you do that and peel back the onion, you find that some economic development teams really stand out above the rest.
For us, the Allen Economic Development team really stood out and played a key role in our decision to select Allen. They convinced Frontier that they were the real deal and that they would deliver on the commitments they were making. They outlined incentives for us to bring jobs to Allen, then created a timeline and a definition of those jobs. We had a great deal of confidence that, once we brought jobs to Allen and submitted the applications for training grants and other incentives, they would deliver on their commitment.
Allen and the Greater Allen area have absolutely delivered on what the economic development team said we would experience, both in terms of the quality of candidates for jobs and availability. Those are the two things that you worry about: Can you scale up to the needs of your hiring, and are you going to be able to hire quality candidates, because generally, higher quality leads to lower turnover.
How can an economic development board help a company transition into a community?
A top-notch board can help with recruiting and also help get your name out in the community. For example, since we started recruiting in June, the board has been with us side by side, helping the community understand who we are and giving us the opportunity to get our name out. A quality board can also provide guidance as to where you should be in the community so that people will know who you are and, when they are considering employment opportunities, will put your company at the top.
In our case, the economic development board members have been terrific. Early on, they introduced us to the mayor and have been key to introducing us to critical leaders in the community, and to those at the state and federal level, as well. And even after we signed the lease, the board has not forgotten who we are and continues to offer assistance.
What advice would you give to a business considering relocating?
Take advantage of all that the economic development board and the chamber of commerce have to offer.
Employers tend to not realize that these resources are there to help their move be successful. Sometimes employers take the approach of having to do everything themselves. They have a lot invested and need to make sure that the start-up in a new location goes well, and they don’t necessarily ask for help.
For example, when we decided to make the move, we had an issue with training space. We needed to hire 80 call center representatives before our building was ready to be occupied. We needed three training classrooms that had power so that all the participants could use PCs. And if we didn’t have that, it would have been a major barrier to having people ready for the systems cutover we accomplished on Oct. 1.
The economic development helped us get in touch with the right community leaders, and we were able to use Allen High School for our employees to be trained. If we hadn’t asked if there was some way for them to help us solve this problem, we might have been delayed in getting people hired and trained. But we asked, and Allen delivered, and we were ready to take calls by Oct. 1.
A company also needs to find a community that is a good match. There is a bit of a marriage that goes on with who the leaders are and the way the community is run. Those things need to be consistent from the perspective of the employer, and we have definitely found that in Allen.
Cecilia McKenney is executive vice president, human resources and call centers, with Frontier Communications. Reach her at (203) 614-5047.
Insights Economic Development is brought to you by the Allen Economic Development Corporation, strategically positioned in the Dallas/Fort Worth metro.